Wfrglits 


OOK-KEEEJING 

SIMPLIFIED 


Wall  Street 
Edition 


LIBRARY  OF 

ALLEN  KNIGHT 

CERTIFIED  PUBLIC  ACCOUNTANT 
502  CALIFORNIA  STREET 

SAN     FRANCISCO.     CALIFORNIA 


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ALLEN 


WRIGHT'S 
BOOKKEEPING  SIMPLIFIED 


A  COMPLETE 


ENCYCLOPEDIA 

OF 

BUSINESS  METHODS 

Pioneer 
Exponent  of  Expert  Accounting 

THE  WRIGHT  KEY  TO  DOUBLE  ENTEY 

WALL  STREET  EDITION 


PRINCE  ALBERT  WRIGHT 

PRACTICAL  BOOKKEEPER  AND  CONSULTING  ACCOUNTANT 


P.  A.  WRIGHT  &  CO. 

NEW  YORK 
1901   ' 


•>(JOA  M9N  '33B|d    *|J9ABM  ZC 

saa-nasxooa  PUB  saBHsnand 
'•03    BNIHSIignd   AONViNnODOV 


13 


Copyrighted  1885, 1888, 1890, 1891, 1896, 1901  by 


ALL  RIGHTS   RESERVED. 


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380310 


I  know  there  are  to-day  one  thousand  college  graduates — some  of  them 
having  graduated  with  honor  at  German  universities — who  are  walking  the 
stony  streets  of  New  York,  and  know  not  how  to  earn  a  living. 

HORACE  GREELEY. 

If  one  tenth  of  the  time  consumed  in  the  useless  pursuit  of 
the  dead  languages  had  been  devoted  to  learning  the  simple 
science  of  double-entry  bookkeeping,  the  great  journalist  would 
have  been  spared  the  regret  it  must  have  caused  him  to  make 
such  a  declaration. 

A  few  dollars  expended  in  acquiring  a  business  education 
will  pay  a  larger  annual  dividend  than  one  hundred  times  the 
amount  otherwise  invested.  ~No  man's  education  is  complete 
without  a  knowledge  of  bookkeeping,  hence  it  behooves  every 
one  to  qualify  in  double-entry,  acquiring  a  profession  available 
through  life. 


THE   PLAN   OF  THE   WORK. 


THE  PLAN  OF  THE  WORK 

is  purely  original  with  the  author,  peculiar  to  himself,  and  his 
experience  being  the  sum  and  substance  of  what  he  has  passed 
through  as  a  business  man,  and  hence  knows  it  to  be  useful,  and 
not  what  he  has  read  or  learned  from  hearsay.  The  main  feature 
is  dispensing  with  the  old-fashioned  daybook  and  old-fogy  journal- 
izing— something  unknown  in  business,  therefore  nonsense  extra- 
ordinary. 

Another  popular  and  redeeming  feature,  that  must  commend 
it  to  the  esteem  of  everybody  interested  in  accounts,  is 

THE  APPENDIX, 

containing  over  500  questions,  directing  the  reader's  attention  to 
points  that  should  be  remembered,  and  serving  as  a  leader  to 
guide  him  in  pursuing  the  study  without  a  teacher.  The  last  few 
pages  are  devoted  to  the  Appendix,  which  will  make  it  a  suitable 
text- book  for  schools. 

On  the  right  of  each  question  are  small  figures  indicating  the 
page  in  the  book  on  which  can  be  found  the  answer  thereto  in 
substance,  but  not  in  so  many  words.  Every  question  that  can  be 
asked  on  this  subject  has  been  anticipated  and  answered  in  the 
pages  of  this  book.  If  the  book  is  read  thoroughly  and  compre- 
hensively it  will  be  an  easy  matter  to  frame  correct  answers  to  all 
the  questions,  and  those  who  can  do  so  may  consider  themselves 
thoroughly  conversant  with  the  principles  of  modern  double-entry 
bookkeeping,  and  the  business  method  of  applying  them. 

OEDEE  OF  EEADING-. 

1.  Learn  the  definitions  on  pages,  17,  18,  19,  20,  21. 

2.  Commit   to   memory  the   EIGHT  SHORT  RULES  on  page  29. 
Thus,  Jj^ebit^whoever  owes  us,  Debit  whatever  we  receive.  Debit 
Percentage  we  lose ;  then  reverse  the  order  and  say,  Whoever  owes 
us  we   debit,  Whatever  we   receive  we   debit,  Percentage  we 
lose  we  debit.    Head  the  credit  rules  both  ways  also, 

3.  Familiarize  yourself  with  the  CLASSIFICATION  OF  ACCOUNTS 
(pages  28  and  29),  both  by  their  names  and  nature.     The  nature 
of  a  personal  account  is  somebody  whom  we  owe  or  somebody 
who  owes  us.     The  nature  of  a  representative  account  is  some- 


6  THE   PLAN   OF   THE   WOKK. 

thing  that  really  exists  and  that  can  be  received  or  given  out. 
The  nature  of  a  speculative  account  is  an  imaginary  amount 
which  we  make  or  lose,  but  cannot  receive  or  give  out.  Mdse.  is 
both  a  representative  and  a  speculative  account,  as  it  is  both  real 
and  imaginary.  For  instance,  we  buy  $100  worth  of  goods, 
which  we  receive  and  is  therefore  real  •  to  that  extent  we  neither 
gain  nor  lose.  We  sell  that  $100  worth  of  goods,  and  therefore 
give  it  out,  and  that  much  is  also  real ;  but  we  sell  it  for  $125, 
or  whatever  percentage  we  add  as  our  profit,  hence  the  $25,  or  the 
profit,  is  only  an  imaginary  increase  on  the  real  $100. 

4.  Read  thoroughly  and  comprehensively  pages  31,  32,  33,  34, 
35,  and  learn  the  four  forms  of  Journal  entries, — that  is,  learn  how 
many  Debtor  accounts  and  how  many  Creditor  accounts  are  re- 
quired in  each  form,  also  how  to  read  each :  1st   reads,  BLANK 
Debtor,  on  one  line,  to  BLANK  Creditor,  on  the  next  line  •  2d 
reads,  BLANK  Debtor  to  Sundries,  all  on  one  line /  3d   reads, 
Sundries  Debtor  to  BLANK,  all  on  one  line  •  4th  reads,  Sundries 
Debtor  to  Sundries,  all  on  one  line.     In  writing  it  on  the  books, 
instead  of  "  Blank "   you  substitute   a  name  in  every   instance. 
The  lines  are  read  as  Blank. 

5.  Read  slowly  and  studiously,  not  hurriedly  and  superficially, 
the  description  of  all  the  books,  noticing  the  peculiarities  of  each 
as  to  ruling,  spaces,  columns,  etc.,  beginning  with 

CASH-BOOK Pages  51,  52 


Two  CASH-BOOKS  UNNECESSARY 

SALES-BOOK 

JOURNAL 

LEDGER 

RULING  THE  LEDGER 

CHECK-BOOK 

BILLS  PAYABLE  BOOK 

BILLS  RECEIVABLE  BOOK.  . 


53 
54 

54,  55 

55,  56 

56,  57 
57 


60 
61 

6.  Study  LEDGER    ACCOUNTS  ELUCIDATED,  pages   105  to    113, 
learning  what  the  debit  side  of  each  accounts  means  or  represents, 
what  the  credit  side  represents,  and  what  the  difference  between 
the  two  shows. 

7.  Take  each  question  in  the  Appendix  and  find  the  answer 
thereto,  according  to  the  pages  indicating  where  the  answer  can  be 
found  ;  also  familiarise  yourself  with  the  forms  of  commercial 
paper,  etc.     This  will  necessarily  give  you  a  review  of  the  entire 
contents  of  the  book. 


PREFACE. 


THERE  are  already  a  sufficient  number  of  works  on  book- 
keeping, from  a  fine  theoretical  standpoint,  before  the  public,  to 
demonstrate  clearly  that  theories  alone  are  inadequate  to  its  wants, 
and  that  no  one  can  see  in  the  application  of  these  finely-drawn 
theories  to  the  imaginary  transactions  therein  given,  many  of 
which  are  far-fetched  and  stated  in  an  unbusinesslike  manner, 
anything  touching  upon  or  even  approximating  their  own  busi- 
ness experience. 

Common  to  all  the  works  we  have  seen  on  the  subject  is  the 
great  stress  placed  upon,  and  the  importance  attached  to,  the 
principles  of  Journalizing,  to  illustrate  which  all  such  works  are 
necessarily  encumbered  with  Day-Book  writing — an  old-fogyism 
entirely  peculiar  to  themselves. 

While  the  literal  meaning  of  journalizing  is  entering  in  a 
Journal,  it  is  commonly  perverted  to  mean  transferring  entries 
from  original  books  into  a  Journal  under  Ledger  titles.  In  the 
latter  sense  of  the  word  we  condemn  it  as  a  nonsensical  operation, 
fast  becoming  obsolete.  Day-Book  writing  is  something  unheard- 
of  in  business,  and  journalizing  of  this  kind  is  already  a  thing  of 
the  past — at  least  with  modern  bookkeepers,  who  keep  abreast 
with  the  improvements  of  a  progressive  age. 

We  maintain  that  our  books  are  all  journals — that  is,  eacn  is  a 
Journal  of  the  particular  kind  of  transactions  recorded  therein, 


S  PREFACE. 

and  of  course  the  moment  the  entry  is  made  it  is  to  all  intents 
and  purposes  Journalized. 

The  old  school  of  bookkeeping  makes  the  Journal  a  general 
receptacle  for  everything,  or  a  special  vehicle  for  conveying 
everything  into  the  Ledger,  thereby  clogging  the  wheels  of  rapid 
progress,  while  in  business  it  is  used  as  an  independent  record, 
standing  on  a  level  with  Sales  Book  and  Cash  Book,  having  no 
intimate  connection  with  either. 

It  will  readily  be  seen,  therefore,  that  by  avoiding  the  cir- 
cuitous route  of  the  Journal,  and  posting  directly  from  the 
original  entry  we  obviate  writing  the  same  matter  twice,  accom- 
plishing the  desired  result  in  a  much  more  satisfactory  manner, 
and  in  half  the  time. 

They  give  you  many  logical  arguments  from  which  to  deduce 
your  own  conclusion,  where  in  this  book  you  are  presented  with 
conclusions  already  reached.  It  is  the  province  of  this  manual  to 
combine  the  science  and  art  of  modern  double-entry  bookkeeping 
as  practised  in  business.  As  a  science  it  advances  all  the  theories 
and  principles  of  double-entry,  thereby  laying  the  solid  ground- 
work upon  which  is  constructed,  in  artistic  style,  a  full  miniature 
set  of  books,  in  which  the  principles  are  applied  and  exemplified, 
showing  the  opening  of  a  set  of  books,  many  current  entries  in 
great  variety,  the  monthly  and  final  closing,  also  reopening,  etc. 

It  was  originally  designed  for  exclusive  use  in  connection 
with  the  author's  PRIVATE  COURSE  OF  PRACTICAL  INSTRUCTION 
IN  DOUBLE-ENTRY  BOOKKEEPING,  but  as  there  are  many  who  do 
not  feel  able  to  incur  the  expense  of  such  a  course,  and  many 
others  who  find  it  impracticable  to  do  so,  it  is  offered  to  all  who 
desire  to  take  the  initiative  step  in  mastering  the  theories  and 
principles  of  double-entry,  without  which  it  is  impossible  to  ever 
become  proficient  bookkeepers. 

If  we  learn  the  principles ',  we  have  laid  the  theoretical  corner- 
stone upon  which  to  build  successfully  a  super  structural  practice. 

It  will  doubtless  prove  to  be  the  desideratum  of  those  having 
some  knowledge  of  the  subject  desiring  further  information  on 
the  special  points  herein  elucidated,  while  its  simplicity  will  make 
it  specially  adapted  to  the  wants  of  those  having  their  first  lesson 
in  bookkeeping  yet  to  learn. 


PREFACE.  9 

To  learn  book-keeping  properly,  one  must  keep  books,  and  to 
meet  that  requirement,  there  are  two  extra  sets  introduced  for 
the  student's  practice.  It  is  a  well-understood  principle  with 
experienced  accountants,  that  a  routine  in  double  entry,  once 
'  established,  would  be  simply  a  matter  of  repetition  ever  after- 
wards, during  the  continuance  of  the  business ;  and  for  that 
reason,  in  creating  an  imaginary  business  and  suggesting  such 
transactions  as  are  necessary  to  produce  a  set  of  books  that 
would  be  in  every  way  businesslike,  there  will  be  unavoidable 
repetition  of  many  words  and  phrases  necessary  to  explain 
them,  which  would  be  condemned  as  unpardonable  tautology 
by  scientific  writers  who  carry  a  large  stock  of  synonyms  in 
which  to  express  and  embellish  their  ideas.  We  are  rich  in 
experience  in  the  art  of  book-keeping,  but  our  inexperience  as 
a  writer  accounts  for  the  impoverished  condition  of  our  voca- 
bulary, and  the  plain  matter-of-fact  way  we  have  of  telling 
what  we  know  ;  which  could  be  made  to  seem  more  erudite,  if 
clothed  in  the  rich  verbiage  and  measured  by  the  beautifully 
rounded  periods  of  those  whose  business  it  is  to  write  accord- 
ing to  the  strict  rules  of  rhetoric.  We  hope  to  render  a  per- 
manent service  to  those  who  seek  to  learn  that  which  they  do 
not  already  know,  and  we  feel  assured  that  those  who  are  in  any 
way  interested  in  that  which  has  been  our  life's  work — book- 
keeping— will  read  and  practise  these  pages  with  a  fascinating 
interest  they  never  experienced  in  the  perusal  of  any  other 
book,  and  therefore  commend  it  to  them  as  being  worthy  of  a 
place  in  their  curriculum  of  studies. 

In  submitting  this  little  volume  for  the  kind  consideration 
.and  patronage  of  a  discriminating  public,  it  is  hoped  they  will 

"  Not  view  it  with  a  critic's  eye, 
But  pass  its  imperfections  by," 

as  it  is  not  compiled  from  more  voluminous  works,  like  many 
others  that  are  constantly  springing  into  existence  with  the 
spontaneity  of  mushroom  growth  ;  nor  is  it  the  result  of  deep 
research  and  study  of  the  text,  but  the  spontaneous  outgrowth 
of  many  years'  experience  and  assiduous  toil  at  a  book-keeper's 
desk  by 

THE  AUTHOR 


MISCELL  A  N  EOUS. 


11 


SYNOPSIS. 

PLAN  of  the  work — Abbreviations  and  signs  used  in  business — Model  private 
counting-room  illustration— Nomenclature  of  bookkeeping— Press  -ropy- 
ing— Origin  of  double  entry — Necessity,  the  mother  of  inventions — Book- 
keeping in  its  simplest  sense — A  question  in  which  all  have  a  personal  in- 
terest—Bookkeeping as  a  profession — The  most  essential  qualifications  of 
a  good  bookkeeper — A  poem,  not  a  drudgery — Business  men — Importance 
of  bookkeeping  estimated — Practical  hints  to  bookkeepers — A  good 
motto — Duty  as  successor — Fallacious  methods  exposed— Classification  of 
accounts — Firm  name  conspicuous  in  its  absence — The  great  principle 
underlying  double  entry — Eight  short  rules,  the  finest  in  the  land — Six 
supplementary  rules  affecting  personal  accounts— Other  signs  of  debit  and 
credit — THE  SIMPLE  VERSUS  THE  INTRICATE — Journalizing  made  easy — 
Four  forms —Eight  infallible  principles — First  part  and  counter-part  of 
an  entry  explained — A  feature  peculiar  to  all  journal  entries — Debtor  and 
creditor  made  plain  by  impersonating  accounts— Books  necessary  to  com- 
plete a  set— Rule  for  opening  books — Absurdity  of  a  "  Stock  "  account — 
Rules  for  closing  books — Rules  for  reopening  books — How  to  refer  to  ac- 
counts in  the  ledger  without  using  index — Difference  between  single 
entry  and  double  entry — Fourteen  simple  rules  governing  experts  in  ad- 
justing books  that  have  been  kept  by  single  entry— Changing  single  en- 
try into  double  entry — Trial  balance,  when  and  how  often  made — Its  two- 
fold object — How  to  proceed  in  making  it— Four-column  trial  balance 
explained;  its  advantages  over  ordinary  kind — How  we  know  what  the 
footing  of  trial  balance  will  be  in  advance,  that  is  before  drawing  it  off — 
Rules  by  which  any  error  nviy  be  detected  in  a  trial  balance — Rules  for 
making' a  balance  sheet — When  red  ink  should  be  used — Cash-book  de- 
scribed— The  right  and  the  wrong  way  of  managing  discount  column 
in  cash-book— Two  cash-books  unnecessary — Sales-book,  also  journal 
described— The  ledger,  the  finest  description  ever  given  of  this  important 
book — A  season,  what  it  means — Ruling  the  ledger,  how  it  should  be 
done — The  time  for  ruling  it— Few  rule  at  the  proper  time — Check-book 
how  managed — Work  usually  done  on  check-book  that  is  superfluous — 
Love's  labor  lost — Lost  checks — How  to  restore  certified  checks  if  not 
used — The  bank-book  (or  pass-book)  how  to  balance  it — The  most  com- 
plete explanation  ever  given  which  alone  is  worth  the  price  of  this  book — 
Receipt-book,  bills  payable,  bills  receivable,  invoice  and  accounts  receiva- 
ble books  all  fully  described — Filing  papers,  the  right  way  and  wrong  way 
shown  in  pictures— Assistant  bookkeeper's  duties  defined — A  full  miniature 
set  of  books,  showing  all  the  entries  from  the  opening  to  final  closing— Office 
routine — When  special  columns  would  be  used  in  the  journal,  how  to 
arrange  them;  a  false  method  by  a  pseudo  author — Terms,  what  it  means 
and  how  stated— Dating  ahead — Matters  not  entrusted  to  a  bookkeeper 
— Transcript,  when  such  a  book  is  used — The  original  form  of  ledger 
continued  in  its  pristine  simplicity — How  to  collect  notes  due  at  a  dis- 
tance—Superfluous columns  in  ready  made  bill-books— Ledger  accounts 
elucidated;  more  information  on  this  subject  than  is  contained  in  all  other 
publications  combined — Department  accounts,  how  managed — A  sys- 
tem of  checking  long  ledger  accounts  when  differences  arise  in  settle- 
ments—Trial balance  book  described,  and  why  not  recommended— Order 
book  and  memoranda  book  described — Commercial  correspondence;  many 
forms  given  of  high  toned  dignified  business  letters — Commercial  papers; 
various  kinds  shown — Mercantile  calculations  covering  percentage— Short 
multiplication,  cancellation — Foreign  money:  Francs,  Marks  and  Ster- 
ling how  reduced  to  currency — Averaging  accounts — Mathematical  won- 
ders. These  many  topics  are  woven  into  the  most  fascinating  and  in- 
structive story  you  ever  read. 


ADDENDUM. 


\  BBREVIATIONS 22 

A  Bookkeeper's  Prerogatives 270 

Another  So-Called"   System" 279 

A  Hint  in  Writing  Letters 284 

A  Misused  Abbreviation 278 

Branch  Houses 292 

Contingent  Liability 274 

Discipline 285 

" Dr,"  "  Cr,"  " To,"  and  " By  "  Must  Not  Be  Omitted 282 

Erasures 276 

Examination  for  Bookkeeper's  Position    290 

Expert  Accountants 292 

Fraud— How  Detected— How  Prevented 287 

In  Liquidation 248 

Imperfect  Articulation 274 

Method 271 

Mathematical  Paradox 281 

No  Single-Entry  Trial  Balance 247 

Not  Infallible 247 

Sales  Sheets 283 

Stand  A loof 286 

Three  Days  of  Grace 279 

Two  Pen  Pictures 288 

The  Best  Way  to  Subtract 282 

Uniformity  272 

Up-End  Down 273 

Wright's  Protege 289 

WALL  STREET  METHODS. .  295  to  345 


CONTENTS. 


A  Common-sense  View  of  Bookkeeping  ....................  .......  23,  24 
cceptance  ......................................................       137 

Accommodation  Paper  (Fourth  Afterthought)  .......................       227 

Account  Sales  .......................   ............  ..............      235 

Accounts  Receivable  Book  ..........................................      130 

Appendix.  .  .  ...................................................  346  to  368 

Advantage  of  Double  Entry  (Eighth  Afterthought)  ..................       245 

Assistant  Bookkeeper's  Duties  ..............................  .........      123 

Averaging  Accounts  .......  ,  .....................................  ...      145 

B 

Balance  Sheet,  Single  Entry  ......................................      131 
alance  Sheet  (Artistic  and  Ordinary)  ........  .  ...................  116,  117 

Bank  Book  ............  .  ..........................................        58 

Bill  or  Invoice  ........................................  .  ............       139 

Bills  Payable  Book.  .........  .  ....................................        60 

Bills  Receivable  Book  ...........  .  .............................  .  ____        61 

Bookkeepers  ......................................................        24 

Bookkeeping  as  a  Profession  ........................................        24 

Bookkeeping  Phraseology  ........  „  .................................  17  to  21 

Books  necessary  to  complete  a  Set  ...........................  „  ........        41 

Business  Men  ......................  .  ........................  .  .....  .        25 


/^ash  Book  ...............  7  .  7777  ...........................  .  ......  51 

VJertificate  of  Deposit  ......................................  „....  138 

Chartered  Accountant  .....  .  ...........................  .  ............  91 

Changing  Single  Entry  into  Double  Entry  .......  .  ................  ,  .  .  .  46 

Check  Book  ....................................  .  .................  57 

Classification  of  accounts  ............................................  28 

13 


14  CONTENTS. 

Closing  Books 43 

Commercial  Correspondence 132  to  136 

Commission  Business 233  to  237 

Course  of  Practice 149  to  227 

D 

Debtor  and  Creditor 36 

epartment  Accounts 112 

Detecting  Errors  in  Trial  Balance 49 

Double  Entry 29 

Draft , 137 

Due  Bill 138 

Duty  as  Successor 27 

E 

Eight  Short  Rules 29 

ight  Infallible  Principles  in  Journalizing 33 

Eighth  Afterthought 245 

F 

Filing  papers 129 

inn  Name 29 

First  Afterthought 226 

Fifth  Afterthought 227 

Forms  of  Commercial  Paper , 137 

Fourth  Afterthought.    227 

Foreign  Exchange  Rules 143 

Fourteen  Rules  in  Single  Entry «, 46,  47 

G 

/^  eneral  Debtors  (see  Chartered  Account). „ 91 

H 

ow  to  refer  to  Accounts  without  the  Index  ...«..•••«•»••«•»•.•..><  ^6 

ow  to  check  Long  Ledger  Accounts.......... o.oo.. ....oo. c.o.   .  113 

I 


H 


Importing  Business 268 
mportance  of  Bookkeeping. « 0 .        25 

Interest  Rules „ 144,  145 


CONTENTS, 

Invoice  Book 62 

I.  O.  U 138 

J 

joint  Stock  Accounts . 249  to  268 

d  ournalizing  made  Easy 31 

Journal 54,77,78 


K 


K 

ey  to  Puzzling  Rules 121 

L 


L 


edger 55,  92 

edger  Accounts  elucidated 105  to  113 

M 


Manufacturing  Business. . . . , .- 229  to  233 
emorandum  Book . 128 

Mercantile  Calculations 140  to  14? 

Miniature  Set  of  Books : 

Accounts  Receivable  Book „ 130 

Bank  Book 124,  125 

Balance  Sheet ...  116,  117,  131 

Bill  Books. ...... f ......... 126,  127 

Cash  Book .. .64,  65,  66,  67,68,  69 

Check  Book .,..118  to  121 

Journal . „ .  <> 79,  80,  81,  82 

Ledger 00 93  to  104 

Sales  Book. .........»«,. ,86,  87,  88,  89 

Trial  Balance 00 ....oo.c 0... ....... .114  115.  201 

O 

Office  Routineo.co.co O..c. , 76 
ffice  Routine  illustrated 241  to  244 

Opening  Books, .....<,..„» . ,., 42  and  155 

Order  Book. ...   ., 128 

Order  of  Reading. . ; 0 5 

Other  Signs  of  Debit  and  Credit. 30 

Outstanding  Accounts  (Seventh  Afterthought) g45 


16  CONTENTS. 


Petit  Accounts 110,  lit 
ersonal  Accounts 28 

Plan  of  the  Work 5 

Practical  Hints  to  Bookkeepers 2ft 

Preface 7  to  9 

Press  Copying 149 

Profit  and  Loss. , Ill 

R 

Receipt  Book  60 

ed  Ink,  Use  of 50 

Reducing  Foreign  Exchange  to  U.  S.  Currency 14& 

Reopening  Books 45 

Representative  Accounts 28 

Ruling  the  Ledger 56 

S 

Sales  Book 54,  83,  84,  85 
,_ cientific  Terminology ....  17  to  21 

Second  Afterthought 226 

Seventh  Afterthought 245 

Sixth  Afterthought 228 

Shipping  Ticket 240 

Speculative  Accounts 28 

Stock 43 

Statements 139,  228 

Synopsis  of  Contents 12,  151  to  154 

T 

Trial  Balance  Book 122 
rial  Balance  explained 90,  91,  247 

Trial  Balance  (Four  Column  and  Ordinary) 114,  115,  201 

Transcript  Book 85 

Two  Single  Entry  Propositions 150 

Two  Cash  Books  unnecessary , 53 

The  Simple  versus  the  Intricate 63 

Third  Afterthought 226 


W 


w 

hen  Personal  Accounts  are  debited  or  credited 30 

onders  of  Mathematics 147,  230- 


BOOKKEEPING  PHRASEOLOGY 


OR 


SCIENTIFIC  TERMINOLOGY 

USED  IN 

ACCOUNTING. 

The  black  words  on  the  left  are  those  by  which  we  express  ourselves  in 
bookkeeping  sense,  the  ordinary  matter  on  the  right  is  the  conversational 
expression  of  the  same  ideas. 

ACCOUNT. — The  name  of  any  person,  place,  or  thing  repre- 
senting a  collection  of  certain  amounts  affecting  the  same  name, 
either  debit  or  credit,  or  both.  Every  account  has  two  sides — 
debit  and  credit. 

ACCEPTANCE. — A  draft  across  the  face  of  which  has  been 
written,  usually  in  red  ink,  the  following  matter,  viz. :  "  Accepted 

-  [give  date  of  acceptance]  ;  payable  at [state  whether 

at  office  or  bank]  ; ''  [sign  firm-name  on  whom  it  was 

drawn]. 

ACCOUNTS  PAYABLE. — Parties  we  owe  in  open  account  on 
the  Ledger. 

ACCOUNTS  RECEIVABLE. — Parties  owing  us  in  open  ac- 
count on  the  Ledger,  and  the  contra  of  Accounts  Payable. 

ACCOUNT  CURRENT. — A  running  account ;  that  is,  a  state- 
ment of  a  running  account,  usually  rendered  at  the  end  of  each 
month,  showing  date  and  amount  of  each  item  of  debit  and  credit 
for  the  current  month,  and  the  balance. 

ACCOUNT  SALES. — A  statement  of  sales  made  for  account  of 
2 


18  BOOKKEEPING   SIMPLIFIED. 

others,  giving  all  the  particulars  of  the  sale,  also  showing  the  ex- 
pense incurred  from  the  time  goods  were  received  until  sold,  in- 
cluding our  fee  for  selling  them,  which  is  called  Commission, 
••and  the  remainder,  after  deducting  all  charges,  which  is  called 
Net  Proceeds. 

AUDITING  ACCOUNTS. — A  general  examination,  comparing 
^charges  with  vouchers,  passing  upon  their  correctness  or  incor- 
rectness. 

ASSETS. — See  RESOURCES. 

AVERAGING  ACCOUNTS. — Fixing  a  date  upon  which  a  num- 
ber of  amounts  occurring  on  different  dates,  and  having  different 
time  to  run,  would  amount  to  the  same  thing  as  if  the  total  of  all 
the  amounts  had  occurred  on  one  date. 

BALANCE. — Difference  between  the  debit  and  the  credit  side 
of  any  account.  The  remainder,  after  deducting  the  smaller  from 
the  greater  amount. 

BALANCE  SHEET. — An  annual  or  semi-annual  statement ;  a 
final  exhibit  at  the  end  of  a  season,  showing  gains  or  losses,  re- 
sources and  liabilities,  net  worth  or  insolvency. 

BILL. — Statement  of  items,  showing  date  and  amount  of  ob- 
ligation— Invoice. 

BILL  CLERK. — One  who  makes  out  bills,  or  copies  on  bill- 
heads the  entries  on  Sales  Book. 

BILLS  PAYABLE. — Our  note  or  acceptance;  that  is,  our 
written  promise  to  pay. 

BILLS  RECEIVABLE. — Another  individual  or  firm's  note  or 
acceptance ;  that  is,  their  written  promise  to  pay. 

CALL  CLERK. — One  who  "  calls  off  "  the  goods  to  be  charged ; 
that  is,  describes  the  goods  by  name,  number  of  pieces,  number 
of  yards  per  piece  and  price  sold  at ;  if  not  sold  by  piece,  state 
other  facts  corresponding  in  effect  thereto. 

CASH. — Ready  money,  including  checks,  due  bills,  etc.,  con- 
vertible into  ready  money  on  presentation  to  the  proper  party  at 
the  proper  place. 

CERTIFICATE  OP  DEPOSIT. — Form  of  commercial  paper 
issued  by  banks  to  parties  who  do  not  have  a  bank  account. 

CHARGE. — Synonymous  with  Debit — which  see. 

CHECK. — An  order  on  a  Bank. 


NOMENCLATURE   OF   BOOKKEEPING.  19 

CLOSING  AN  ACCOUNT.  —  Drawing  red  lines  under  the 
amount  on  both  debit  and  credit  side,  always  ruling  first  on  the 
side  on  which  the  entries  extend  farthest  down  the  page,  and 
making  the  other  side  agree  by  ruling  on  same  lines.  See  remarks 
on  ruling  Ledger  Accounts. 

CREDIT. — Entering  an  obligation  in  favor  of  another. 

CREDITOR. — One  who  is  owed,  or  to  whom  another  is  under 
obligation. 

"  CREDIT  BY." — A  phrase  used  in  ledgerizing  or  posting  on 
the  credit  side. 

DEBIT. — Entering  an  obligation  against  a  debtor — CHARGE — 
the  former  being  used  in  posting,  and  the  latter  in  making 
entry  on  original  book. 

DEBTOR. — One  who  owes,  or  who  is  under  obligation  to 
another. 

"DEBTOR  TO." — A  phrase  used  in  posting  on  debit  side  of 
an  account. 

DISCOUNT. — A  certain  percentage  deducted  from  any  amount 
due  at  some  stated  time  in  the  future  to  reduce  it  to  cash  value. 
In  discounting  commercial  paper  it  is  a  certain  per  cent  per 
annum;  but  in  discounting  open  accounts  it  is  a  certain  per  cent 
of  the  face  of  the  amount  according  to  the  terms  specified  when 
the  indebtedness  was  contracted. 

DOUBLE  ENTRY. — An  entry  affecting  two  or  more  accounts, 
part  debtors  and  part  creditors,  but  equal  in  amounts. 

DRAFT. — An  order  on  a  second  party  to  pay  to  a  third  a 
specified  sum  of  money  at  a  stated  time.  There  are  three  parties 
to  a  draft :  the  drawer^  who  signs  his  name  in  the  lower  right- 
hand  corner ;  thepayor,  on  whom  the  draft  is  drawn,  and  whose 
name  and  address  are  written  in  the  lower  left-hand  corner  ;  and 
the  payee,  whose  name  is  written  in  the  body  of  the  draft,  and  in 
whose  favor  the  draft  is  drawn.  The  peculiar  location  of  the 
names  and  the  wording,  as  to  time,  is  what  characterizes  it  as  a  draft. 

ENDORSE. — To  write  name  across  the  back  of  any  class  of 
commercial  paper. 

ENTERING  GOODS. — Making  a  record  on  Sales  Book. 

ENTRY. — A  record  of  a  business  transaction. 

ENTRY  CLERK. — One  who  records  a  sale. 


20  BOOKKEEPING   SIMPLIFIED. 

EXCHANGE. — A  peculiar  form  of  commercial  paper  used  by 
banks  in  transmitting  money  from  one  to  another  ;  also  a  fee, 
charged  by  banks  for  collecting  drafts  or  "  out  of  town"  checks — 
that  is,  checks  on  banks  in  other  towns  foreign  to  the  place  of 
their  location. 

EXPENSE. — That  which  requires  an  outlay  of  money  for 
which  we  get  no  direct  returns.  Consumed  in  carrying  on  the 
business. 

INVENTORY. — A  statement  showing  all  the  goods  on  hand,  in 
detail,  at  cost  price. 

INTEREST. — A  certain  percentage  per  annum  added  to  any 
amount  after  maturity,  for  usage  of  same  during  the  time  for 
which  the  interest  is  added. 

INSOLVENT. — Without  capital. 

JOURNALIZING. — Arranging  accounts  in  books  of  original 
entry  under  Ledger  titles. 

LEDGER  ACCOUNTS. — An  account  (which  see)  transferred 
to  the  Ledger,  usually  at  top  of  the  page,  and  occupying  the  most 
prominent  space  between  Dr.  and  Or.  A  place  for  concentrating 
all  amounts  affecting  any  account  appearing  from  time  to  time 
throughout  all  books  of  original  entry. 

LIABILITIES. — Indebtedness.  What  we  are  liable  for  as 
payors. 

MDSE. — The  commodity  in  which  we  are  dealing ;  that  is, 
buying  to  sell  again. 

NOTE. — A  written  promise  to  pay. 

OFFICE  FURNITURE. — Common  name  given  to  all  articles 
of  furniture  in  the  office. 

ON  ACCOUNT. — Part  of  an  account — meaning  that  there  is  a 
Ledger  Account  already  existing,  or  that  one  is  to  be  opened. 

OPENING  AN  ACCOUNT. — Writing  it  for  the  first  time  in 
any  book  of  original  entry  in  a  relative  position  to  other  accounts, 
from  which  it  is  transferred  to  the  Ledger,  and  not  writing  it  in 
the  Ledger  for  the  first  time — as  is  erroneously  claimed  by  some. 
Writing  it  in  the  Ledger  is  of  course  opening  the  Ledger  Account ; 
but  inasmuch  as  no  entry  is  made  in  the  Ledger  until  first  made 
in  some  book  of  original  entry,  the  account  must  be  first  opened 
apart  from  the  Ledger. 


NOMENCLATURE   OF   BOOKKEEPING.  21 

POSTING. — Transferring  dates,  names,  and  amounts  from 
original  entries  into  the  Ledger.  Ledgerizing. 

PROCEEDS. — What  is  left  after  deducting  all  charge&jorjex- 
penses  in  any  transaction. 

PER  CENT. — On  or  by  the  hundred,  applied  not  only  to 
money,  but  any  operation  in  which  reference  is  made  to  100  as  a 
unit  of  comparison. 

RATE  PER  CENT. — The  number  of  hundredths  under  con- 
sideration. 

RESOURCES. — Persons  owing  us,  and  what  we  possess.  Our 
effects.  Assets. 

RECEIVING  CLERK. — One  who  receives  goods,  checks  each 
item  on  Invoice,  "  O.  K.'s"  it,  and  signs  his  initials,  after  which 
he  turns  it  into  the  office  for  the  bookkeeper's  attention. 

SOLVENT. — Able  to  pay  indebtedness. 

SUNDRIES. — In  common  parlance,  Sundries  means  various 
articles ;  but  in  bookkeeping  phraseology  it  refers  to  accounts  only 
— meaning  two  or  more  are  under  consideration. 

O 

SHIPPING  CLERK. — One  who  attends  to  packing  goods, 
marking  the  cases,  and  getting  receipt  from  transportation  com- 
pany. 

SUSPENSE. — An  account  representing  doubtful  assets  or  long 
standing  accounts,  which  for  any  reason  are  held  in  suspense 
awaiting  final  adjustment. 

TAKING  STOCK. — Preparing  inventory ;  that  is,  finding  out 
how  many  articles  of  merchandise  we  have  on  hand  of  each  kind 
at  the  cost  price. 

"  TEAM." — Entry  clerk,  call  clerk,  and  bill  clerk  constitute  a 
team. 

TRIAL  BALANCE. — A  monthly  statement  containing  every 
unbalanced  account  in  the  Ledger,  showing  balance,  either  debit 
or  credit,  in  each. 

"TO  BALANCE  ACCOUNT." — Place  a  sufficient  amount  on 
the  smaller  side  to  make  it  equal  to  the  greater. 

WITHOUT  RECOURSE. — Not  liable  as  pay  or  of  any  paper  on 
which  our  name  appears  as  endorser. 


BOOKKEEPING  SIMPLIFIED. 


ABBREVIATIONS    AND    SIGNS    USED    IN 
BUSINESS. 


Acct.  or  a/c.  Account 

Ad.. Advertisement 

Am't Amount 

Av Average 

Bal Balance 

Bk Bank 

Bo't Bought 

B.P Bills  Payable 

Bro't Brought 

Bro Brother 

Bros Brothers 

B.R Bills  Receivable 

Cash'r Cashier 

C.  B Cash  Book 

C.  &  C Case  and  Cartage 

Chg'd Charged 

Ck Check 

C.  O.  D Collect  on  delivery 

Co Company 

Coll Collect 

Col Column 

Cr Credit 

Ctge Cartage 

Da's Days 

Dep Deposited 

Df  t Draft 

Disct'd Discounted 

Dis Discount 

Del'd Delivered 

Do Ditto 

Doz Dozen 

Dr Debit  or  Debtor 

Ea Each 

Ent Entered 

E.  &  O.  E. .  .Errors  and  Omissions 
Excepted 

Exch Exchange 

Exp Expense 

Expr Express 

Fol Folio 

Forw'd Forward 

Frt Freight 

Fur't Furniture 

Ins Insurance 

Inst Instant,  present  time 

Int Interest 

Inv Invoice 

Jo Journal 

Mdse Merchandise 

Memo  . .      .  .Memorandum 


M'f'g Manufacturing 

Mo Month 

Nat'l National 

No Number 

O.  B Order  Book 

O.L Old  Ledger 

O.  K "Oil  Korrect, "  right 

Pay Payable 

Pay't Payment 

P.  C Postal  Card 

PC'S Pieces 

Pd Paid 

Pkg Package 

P.  &L Profit  &  Loss 

Pp Prepaid 

Pro Proceeds 

Prox Proximo,  next  month 

Pt Pint 

Pr Pair 

Qt Quart 

Rec Receivable 

Rec'd Received 

Ret Return 

Ret'd Returned 

R.  R Rail  Road 

S.  B Sales  Book 

Sec Secretary 

S/d Sight  Draft 

St Sight 

Stm't Statement 

Sunds. ..... .Sundries 

Supt Superintendent 

T.  B Trial  Balance 

Trans 'd Transferred 

Trans Transfer 

Ult Ultimo,  last  month 

Wk Week 

@ At  the  rate  of 

% Percent 

=j}= Number 

" Ditto 

/vw Nothing  omitted 

y Check  mark 

^f., Double  check 

-f- Addition 

— Subtraction 

X Multiplication 

= Equal  to 

&..  ..And 


COMMON-SENSE 

VIEW  OF 

BOOK-KEEPING 

PROM 

A  BUSINESS  STANDPOINT. 


It  is  the  universal  custom  of  thinking  minds  pursuing  any  voca- 
tion in  life  to  make  a  memorandum  of  everything  they  do,  see, 
or  hear,  worthy  of  note,  which  they  desire  to  remember.  In 
commercial  pursuits  especially  a  memorandum  is  kept  of  such 
facts  as  have  a  pecuniary  connection  with  the  business,  to  which 
we  can  revert  and  refresh  our  memory,  and  the  inspection  of 
which  at  any  time  will  reveal  the  true  state  of  our  business  and 
property. 

The  multiplicity  and  recurring  frequency  of  these  memoranda 
require  they  should  be  kept  systematically,  to  enable  us  to  find 
them  readily  and  place  them  at  our  command.  This  being  a 
necessity,  the  first  bookkeeper  probably  invoked  the  prolific 
mother  of  inventions  for  assistance,  and  was  presented  with  a 
beautiful  system  of  accounts,  called  by  common  consent  Double 
Entry. 

Bookkeeping,  therefore,  in  its  simplest  sense  is  nothing  more 
than  making  a  memorandum  of  important  facts,  keeping  in 
chronological  order  a  record  of  everything  transpiring  in  our 
business,  whereby  our  interest  is  affected,  either  favorably  or 
adversely. 

Bookkeepers  are  supposed  to  be  informed  of  every  transaction 
that  takes  place,  which  they  will  never  entirely  forget  during 
their  connection  with  the  business ;  but  to  remember  the  dates, 
amounts  involved,  and  important  particulars  in  so  many  instances 
would  be  an  impossibility ;  hence  bookkeeping  was  instituted  to 
assist  their  memory. 


24  BOOKKEEPING   SIMPLIFIED. 

It  is  a  duty  every  one  owes  himself  before  starting  in  life — 
undertaking  to  carve  out  his  own  fortune  in  the  great  stone 
quarry  of  the  world — to  acquire  a  thorough  knowledge  of 
accounts.  How  to  acquire  this  knowledge,  therefore,  in  the 
shortest  time  and  at  the  least  expense  is  a  question  in  which 
every  one  should  have  a  personal  interest.  The  answer  to  this 
great  question  can  be  summed  up  as  follows : 

The  best  way  to  learn  bookkeeping  is  in  the  counting-room  of 
some  large  mercantile  establishment,  which  of  course  would 
require  opportunity  and  a  long  term  of  unremunerative  service. 

The  next  best  way  is  to  enter  as  a  student  the  private  count- 
ing-room of  an  experienced  accountant,  who  knows  what  a  book- 
keeper's duties  are,  and  how  to  define  and  point  them  out  to 
others  with  clearness  and  intelligibility. 

The  reader  has  adopted  the  next  best  way  as  an  ultimatum, 
by  reading  "BOOKKEEPING  SIMPLIFIED,  OK  JOURNALIZING  MADE 
EASY." 


BOOKKEEPING  AS  A   PROFESSION. 

Generally  speaking,  everything  is  prized  according  to  the 
amount  of  labor  and  expense  required  in  obtaining  it ;  hence  the 
modest  profession  of  bookkeeping  is  not  so  highly  esteemed  as  the 
proud  professions  of  law  and  medicine,  but  equally  honorable  and 
respectable>  and  if  pursued  with  fidelity  leads  to  high  positions 
of  honor  and  trust.  It  has  suffered  more,  however,  through  the 
defence  of  incompetent  friends  than  it  could  have  suffered 
through  a  persistent  onslaught  of  adverse  critics. 


BOOKKEEPERS. 

A  bookkeeper  is  not  a  mere  automaton,  capable  of  performing 
the  machine  work  in  bookkeeping,  as  it  were  perfunctorily,  but  in 
a  higher  and  stricter  sense  of  the  word  he  is  one  whose  quick  per- 
ception enables  him  to  comprehend  the  situation  at  a  glance,  and 


A   COMMON-SENSE   VIEW   OF   BOOKKEEPING.  25 

whose  tact  renders  him  capable  of  readily  adapting  himself  to  it ; 
one  who  is  thoroughly  enlisted  in  the  cause  of  his  employer,  and 
duly  impressed  with  the  importance  of  his  position — to  whom 
bookkeeping  is  a  poem,  not  a  drudgery. 

In  the  former  sense  Bookkeeper  is  a  misnomer,  worn  thread- 
bare by  frequent  use,  and  to  a  certain  extent  has  brought  the  pro. 
fession  into  disrepute. 

The  most  essential  qualification  in  a  good  bookkeeper  is  a  still 
tongue  and  strong  decision  of  character,  incapable  of  becoming 
too  intimate  with  the  principals  of  other  departments,  or  too  com- 
municative to  outsiders,  whereby  he  might  divulge  secrets  of  the 
business  known  to  him  through  and  by  virtue  of  his  confidential 
position. 


BUSINESS    MEN. 

Every  man  in  business  for  himself  should  understand  book- 
keeping, in  order  to  understand  how  to  properly  direct  the  man- 
agement of  his  own  accounts:  those  who  do  not  are  liable  to 
become  victims  of  dishonest  employes,  who  may  practise  a  system 
of  false  entries,  entailing  serious  loss — in  fact,  ultimate  financial 
ruin. 


IMPORTANCE  OF  BOOKKEEPING. 

The  importance  of  bookkeeping  cannot  be  overestimated:  it 
-will  be  more  fully  appreciated  when  contemplated  in  connection 
with  the  fact  that  it  is  estimated  but  three  men  out  of  every 
hundred  end  their  business  career  financially  successful,  who  can 
to  a  certain  extent  attribute  their  ultimate  success  to  a  skilful 
management  of  their  accounts. 

On  the  other  hand,  the  great  majority  who  fail  enter  business 
without  duly  considering  the  importance  of  this  prerequisite  to 
success,  and  sooner  or  later  discover  to  their  sorrow  that  natural 


26  BOOKKEEPING   SIMPLIFIED. 

abilities  will  not  supply  the  deficiency  or  preserve  the  intricacies 
of  business  matters  from  inextricable  confusion,  culminating  in 
a  financial  wreck. 


PRACTICAL   HINTS   TO   BOOKKEEPERS. 

It  is  a  bookkeeper's  duty  to  record,  not  to  make,  transactions, 
Never  put  on  record  anything  that  comes  to  you  verbally,  but 
require  a  memorandum  of  the  facts  from  the  proper  party  to  the 
transaction,  which  to  file  as  a  voucher  for  its  authenticity  and  a 
means  of  self -protection. 

File  all  memorandums,  even  of  the  most  trivial  nature,  for  re- 
ference. 

Always  require  receipt  for  payments  in  currency  or  by  check 
made  payable  to  bearer.  See  remarks  on  RECEIPT  BOOK. 

Never  sign  receipt  for  money  received  by  others  without  see- 
ing it  properly  entered  on  Cash  Book  for  obvious  reasons. 

Never  credit  an  Invoice  until  it  has  been  properly  checked  and 
O.  K.'d  by  the  receiving  clerk,  and  you  have  satisfied  yourself 
that  the  prices  and  extensions  are  correct. 

Never  use  the  abbreviation  "  do"  or  the  sign  (  " )  for  figures,  as 
it  is  quite  as  easy  to  make  figures  as  the  substitutes  ;  besides,  the 
sign  (  "  )  is  often  used  w^hen  an  amount  is  purposely  omitted,  and 
therefore  means  nothing. 

Always  insert  ciphers  in  amounts  without  cents;  if  they  are 
omitted,  it  looks  like  an  unfinished  amount. 

Never  use  the  abbreviation  "No"  in  connection  with  figures;  as 
figures  themselves  are  the  numbers  referred  to,  and  to  nse  both 
would  be  the  same  thing  as  drawing  a  picture  of  a  donkey  and 
then  writing  "  This  is  a  donkey."  Although  the  words  might  re- 
fer to  the  picture,  they  might  also  be  construed  as  referring  to  the 
artist  (?). 

When  the  figures  are  to  appear  as  a  subsequent  consideration, 
it  is  proper  to  use  "No"  to  indicate  where  they  are  to  be  located. 

Always  begin  a  new  month  on  a  new  page;  on  all  books  of  ori- 


A    COMMON-SENSE  VIEW    OF  BOOKKEEPING. 

ginal  entry  never  begin  on  part  of  an  unfinished  page  of  pre- 
ceding month. 

Speak  the  truth  at  every  call ; 

A  good  motto — forget  it  not : 
By  its  results  either  stand  or  fall ; 

Both  abuse  and  praise  it  hath  begot. 


DUTY  AS  SUCCESSOR. 

First  thing  in  assuming  charge  of  a  set  of  books  kept  by  another 
is  to  see  if  the  cash  is  straight ;  that  is,  see  if  the  difference  be- 
tween the  Debit  and  Credit  side  of  Cash  Book  agrees  with  the  ac- 
tual amount  of  cash  on  hand.  If  not,  report  the  discrepancy  at 
once  to  the  proper  authority,  who  will  have  it  properly  adjusted. 
Begin  on  a  new  page  with  the  actual  balance  on  hand. 

Then  look  carefully  through  your  Ledger  to  see  what  accounts 
have  been  opened  and  remain  open,  familiarizing  yourself  with 
them  as  soon  as  possible.  It  is  better  to  learn  them  from  the  Led- 
ger than  from  the  index,  as  the  latter  may  contain  accounts  that 
have  been  discontinued — that  is,  closed,  not  to  be  reopened. 

It  is  by  no  means  necessary  to  make  a  Trial  Balance,  as  claimed 
by  a  modern  writer  evidently  of  limited  experience,  as  the  books 
are  assumed  to  be  correct  if  cash  is  in  proper  shape.  If,  however, 
you  have  an  error  in  your  first  Trial  Balance,  it  is  then  time 
enough  to  locate  it  and  all  others  that  may  have  existed  prior  to 
your  stewardship. 

If  such  error  is  not  found  in  the  work  of  the  current  month  it 
will  be  necessary  to  get  your  predecessor's  Trial  Balance  for  the 
previous  month  and  prove  its  correctness.  If  found  to  be  incor- 
rect, report  it  at  headquarters,  and  it  will  then  become  the  work  of 
an  expert  to  trace  the  error  to  its  origin,  ferreting  out  all  other& 
that  may  have  existed  possibly  from  the  beginning  of  your  prede- 
cessor's term  of  service. 

You  would  not  be  expected  to  assume  the  duties  of  an  expert 
in  connection  with  your  own — that  is,  keeping  up  the  current 
work. 


28  BOOKKEEPING   SIMPLIFIED. 

The  science  of  Double  Entry  is  the  same  throughout  the  busi- 
ness world,  but  few  bookkeepers  follow  the  same  routine.  If  you 
are  required  to  adopt  the  routine  already  established,  it  will  be  an 
easy  matter,  provided  you  thoroughly  understand  your  business, 
having  a  precedent  to  guide  you  in  the  work  of  the  retiring 
official. 


CLASSIFICATION    OF  ACCOUNTS. 

We  have  already  seen  that  every  Ledger  account  has  both  a  debit 
and  credit  side,  the  different  natures  of  which  will  be  easily  under- 
stood when  it  is  known  that  all  accounts  can  be  classified  under 
two  principal  headings  called  PERSONAL  and  REPRESENTATIVE,  the 
debit  balance  in  each  meaning  either  an  asset  or  a  loss,  and  the 
credit  balance  meaning  either  a  liability  or  a  gain.  For  a  full  ex- 
planation of  the  subject,  see  article  on  Ledger  Accounts  Eluci- 
dated, on  another  page. 

The  REPRESENTATIVE  accounts  are  divided  into  two  classes — 
those  having  a  tangible  existence  in  the  values  named,  and  those  of 
-a  fictitious  nature — that  is,  having  only  a  nominal  existence. 

The  latter  we  will  call  SPECULATIVE  accounts,  the  chief  of  which 
is  Profit  and  Loss :  all  others  of  that  nature  being  branches  thereof, 
or  tributaries  thereto.  The  Speculative  class,  therefore,  will  in- 
•clude  all  the  accounts  that  represent  either  a  profit  or  a  loss,  and 
all  others  will  represent  either  assets  or  liabilities. 

There  are  a  few  of  the  Representative  class  that  have  a  dual 
nature ;  that  is,  they  may  first  show  either  a  profit  or  a  loss,  after 
which  they  show  part  of  the  assets,  such  as  Merchandise,  Real'  Es- 
tate, and  all  those  in  which  there  appears  an  Inventory. 

In  order  to  formulate  a  rule  for  handling  or  referring  to  ac- 
counts intelligibly,  it  is  necessary  therefore  to  classify  them  under 
the  following  names : 
PERSONAL. 
SPECULATIVE. 

REPRESENTATIVE. 

PERSONAL  accounts  will  refer  to  those  with  individuals,  firms, 
•or  corporations. 


A   COMMON   SENSE   VIEW    OF   BOOKKEEPING.  29* 

SPECULATIVE  will  refer  to  all  accounts  representing  a  gain 
or  loss,  such  as  Mdse.,  Expense,  Interest,  Discount,  Commission, 
Exchange,  Insurance,  etc.  See  subdivisions  of  EXPENSE,  page  106. 
REPRESENTATIVE  will  include  all  others,  such  as  Cash, 
Bills  Receivable,  Bills  Payable,  Office  Furniture,  or  any  account 
representing  certain  values. 


THE    FIRM-NAME. 

Our  firm-name  never  appears  on  the  books  as  a  firm,  but  in  its 
constituent  members  and  component  parts.  By  component  parts 
is  meant  in  this  connection  accounts  that  represent  the  firm.  See 
REPRESENTATIVE  and  SPECULATIVE  accounts. 

When  we  say  Cash  is  debtor  to  whomsoever  pays  us,  we  mean 
our  firm  is  debtor  to  that  party  ;  but  when  we  say  Cash  is  debtor 
to  Mdse.,we  mean  the  same  thing  as  if  we  had  taken  a  certain  sum 
from  one  pocket  and  put  it  into  another. 


DOUBLE  ENTRY. 

Recording  a  transaction  so  as  to  affect  two  or  more  accounts,  trie- 
amount  of  debits  being  equal  to  the  amount  of  credits. 

The  first  law  of  Double  Entry  is  every  debit  amount,  in  one  ac- 
count must  have  a  corresponding  credit  amount  in  some  other 
account,  and  vice  versa. 

The  great  principle  underlying  the  beautiful  system  of  Double 
Entry  bookkeeping  is,  whoever  or  whatever  owes  is  a  debtor,  and 
whoever  or  whatever  is  owed  is  a  creditor. 

Applying  this  principle  to  our  books,  every  charge  or  debit  and 
credit  we  make  is  governed  by  the  following : 

EIGHT  SHORT  RULES. 

DEBIT.  CREDIT. 

Whoever  owes  us.    < —    PERSONAL.  — >  Whoever  we  owe. 

Whatever  OWeS  US.          |     REPRESENTA      j  Whatever  we  ^ve  OUt. 

Whatever  we  receive,  f  (  Whatever  produces  value.. 

Percentage  we  lose.  < —  SPECULATIVE. — >  Percentage  we  make. 

(Read  NINTH  AFTERTHOUGHT,  on  pajre  294.) 


30  BOOKKEEPING   SIMPLIFIED. 


WHEN    PERSONAL    ACCOUNTS   ARE   DEBITED 
OR   CREDITED. 

In  addition  to  the  eight  short  rules  for  debits  and  credits  it  will 
be  well  to  remember  that  there  are  four  conditions  under  which 
we  debit  personal  accounts,  and  four  similar  conditions  under 
which  they  are  credited,  viz. : 

DEBITED. 

1.  When  we  sell  a  party  goods  on  account. 

2.  When  we  pay  them. 

3.  When  they  made  us  an  allowance  of  discounts,  or  for  dam- 
ages, or  otherwise. 

The  first  two  rules  might  be  more  comprehensive  under  the 
statement,  When  we  deliver  a  party  anything,  they  are  charged 
with  whatsoever  it  might  be. 

4.  When  we  render  a  service. 

CREDITED, 

1.  When  we  buy  goods  from  them  on  account. 

2.  When  they  pay  us  or  when  they  deliver  anything  to  us. 

3.  When  we  make  them  an  allowance  of  discount  or  for  dama- 
ges, goods  returned,  or  in  any  way  reduce  their  indebtedness. 

4.  When  a  service  is  rendered  us. 


OTHER   SIGNS   OF   DEBIT   AND    CREDIT. 

All  accounts  preceding  the  abbreviation  Dr.,  and  preceded  by 
the  capitalized  By,  are  to  be  debited  in  posting. 

All  accounts  preceded  by  the  word  To  are  to  be  credited  in 
posting. 

The  left-hand  column  or  side  is  for  debits,  and  the  right-hand 
column  or  side  is  for  credits,  throughout  all  the  books. 


A   COMMON-SENSE   VIEW   OF   BOOKKEEPING.  31 

JOURNALIZING  MADE  EASY. 

Journalizing  is  conceded  to  be  the  most  difficult  part  of  btK>k- 
keeping.  By  following  the  suggestions  herewith  givea,  any  per- 
son having  a  common -school  education  can  Journalize  any  trans- 
action if  put  in  possession  of  all  the  facts  connected  therewith, 
showing  what  accounts  are  affected,  from  which  it  is  easy  to  con- 
clude, correctly,  how  they  are  affected  by  the  application  of  the 
eight  short  rules  for  debits  and  credits  to  be  found  on  page  29. 

The  principles  of  Journalizing  consist  in  the  proper  arrange- 
ment of  accounts  in  original  entries  under  Ledger  titles,  according 
to  the  system  of  Double  Entry. 

Every  transaction  necessarily  affects  two  or  more  accounts, 
otherwise  it  cannot  be  a  double  entry  ;  it  must  contain  at  least 
one  debtor  and  one  creditor  ;  possibly  one  debtor  and  two  or  more 
creditors  ;  two  or  more  debtors,  and  one  creditor  ;  or  two  or  more 
debtors,  and  two  or  more  creditors. 

It  will  readily  be  understood,  therefore,  that  there  are  four 
propositions  necessitating  four  forms  of  Journal  entries,  in  mak- 
ing which  there  are  three  contingencies  to  be  considered. 

1st.  How  many  accounts  will  be  affected  by  the  transaction  to 
be/  recorded. 

We  determine  how  many  accounts  there  will  be  in  our  Journal 
€n try  by  the  number  of  amounts  we  have  under  consideration,  as 
each  aniQunL  must  have  &name,  by  which  it  is  identified  or  under- 
stood, and  the  name  with  the  n,mmi,nt\§  what  is  meant  by  account. 
Every  transaction  necessarily  gives  rise  to  certain  lines  of  figures, 
called  amounts,  arid  the  figures  have  names  indicative  of  what 
thpy  are  or  represent.  When  there  are  three  (or  more)  lines pf  fig- 
<ir.es  under  consideration,  they  give  rise  to  a  fourth  (or  one  more) 
inline  total,  which  will  also  have  a  name,  by  which  it  is  under- 
stood. If  only  two  Amounts  are  given,  they  give  rise  to  a  third 


in  either  their  total  or  difference  between  them,  which  total  or 
difference  will  also  mean  something :  hence  will  have  a  name. 
If  only  one  amount  is  given,  it  must  have  two  names :  one  a  debtor 
and  the  other  a  creditor ;  for  instance,  we  buy  $500  worth  of  goods 
of  the  Wright  Manufacturing  Co.,  for  which  we  owe  them. — ($500 


32  BOOKKEEPING   SIMPLIFIED. 

being  understood  and  not  repeated  in  stating  the  facts).  The 
$500  worth  of  goods  we  call  Mdse.,  and  the  $500,  which  it 
is  understood  we  owe  them,  would  be  called  by  their  own  name; 
hence  their  account  and  Mdse.  account. 

The  names  of  accounts  would  be  suggested  by  the  requirements 
of  the  business.  The  bookkeeper  does  not  create  accounts  to  suit 
himself  \  but  the  proprietor  tells  liim  what  accounts  to  open,  to 
show  certain  results  that  he  wishes  to  know  at  the  end  of  ike 
season,  if  he  knows  anything  about  business;  if  not,  the  book- 
keeper must  anticipate  his  wishes,  and  adopts  suitable  names  to 
represent  the  results  that  would  doubtless  be  inquired  about. 

2nd.  We  must  determine  what  they  are  and  to  what  class  they 
belong. 

When  we  have  the  name  of  a  person  or  firm  under  consider- 
ation it  is  simply  a  question  as  to  whether  we  owe  them  or  they 
owe  us,  to  determine  which  a  knowledge  of  bookkeeping  is  not 
necessary  ;  but  when  we  apply  our  two  rules  affecting  the  per- 
sonal classification  on  page  29,  we  can  determine  what  to  do  with 
it  from  a  bookkeeping  point  of  view.  When  we  have  &  percent- 
age under  consideration,  which  means  an  imaginary  amount  rep- 
resenting a  gain  or  loss,  the  only  question  is,  do  we  gain  it  or  lose 
it,  which  we  could  also  easily  determine  in  our  own  minds  with- 
out understanding  bookkeeping.  Then  by  applying  the  last  two 
rules  on  page  29,  which  apply  to  the  speculative  classification, 
we  can  determine  whether  to  debit  it  or  credit  it.  If  we  have 
under  consideration  the  name  of  some  real  thing  that  we  can 
handle,  the  question  is,  how  do  we  handle  it, — do  we  receive  it  or 
do  we  give  it  out  ?  We  can  conclude  at  once  in  our  own  mind,  and 
then  apply  our  rules  affecting  the  representative  classification  on 
page  29. 

3rd.  How  they  are  affected  whether  debited  or  credited,  dis- 
posing of  SPECULATIVE  accounts  first,  in  reaching  a  conclusion, 
REPRESENTATIVE  next,  and  PERSONAL  last. 

An  account  is  benefited  when  it  is  credited,  and  is  accountable 
or  responsible  when  it  is  debited. 

When  a  transaction  is  stated,  we  conclude  what  accounts  are 
affected  by  applying  the  following 


A   COMMON-SENSE  VIEW    OF   BOOKKEEPING.  33 

EIGHT    PRINCIPLES. 

1st.  If  we  receive  something  and  give  nothing  in  exchange  for 
it,  we  certainly  must  owe  whoever  delivered  it  to  us ;  hence  the 
rules  Debit  whatever  we  receive,  and  Credit  whoever  we  owe. 

2nd.  If  we  receive  something  and  give  something  in  exchange 
therefor,  then  we  do  not  owe  any  one,  and  for  that  reason  no 
personal  account  can  be  affected ;  but  it  is  an  issue  between 
what  we  receive,  which  must  be  debited,  and  what  we  give  out, 
which  must  be  credited. 

3rd.  If  we  give  out  something  and  receive  nothing  in  exchange 
for  it,  then  the  person  to  whom  we  deliver  it  must  owe  us  ;  hence 
credit  whatever  we  give,  and  debit  whoever  owes  us. 

4th.  If  we  give  out  something  and  receive  something  in  ex- 
change, then  no  one  owes  us;  hence  no  personal  account  could  be 
affected,  as  it  is  an  issue  between  what  we  give  out  and  what  we 
receive. 

5th.  If  we  owe  somebody  without  receiving  anything  from 
them,  it  must  be  a  matter  of  loss  to  us ;  for  that  reason,  debit 
percentage  we  lose,  and  credit  whoever  we  owe. 

6th.  If  somebody  owes  us,  for  which  we  have  delivered  them 
nothing,  then  we  must  have  gained  whatever  is  the  amount ; 
hence  debit  whoever  owes  us,  and  credit  percentage  we  gain. 

7th.  If  we  receive  something  and  neither  owe  for  it  nor  give 
anything  in  exchange  for  it,  we  must  have  gained  the  amount  re- 
ceived ;  it  is  then  an  issue  between  whatever  we  receive,  which  we 
debit,  and  percentage  we  gain,  which  we  credit. 

8th.  If  we  give  out  something  and  receive  nothing  in  exchange 
for  it,  nor  does  any  one  owe  us  for  it,  then  we  must  have  lost  that 
amount ;  hence  an  issue  between  whatever  we  give  out,  which  we 
credit,  and  percentage  we  lose,  which  we  debit.  Thus  it  will  be 
seen  that  both  a  debit  rule  and  a  credit  rule  are  brought  to  bear 
on  every  transaction. 

Having  settled  these  facts,  we  next  determine  what  the  con- 
struction of  our  Journal  entry  will  be,  which  will  be  governed  by 
the  number  of  debtors  and  creditors  that  will  appear  therein,  ac- 
cording to  the  following  four  formulae  : 


34  BOOKKEEPING   SIMPLIFIED. 

FIRST  FORM. 

If  one  debtor  and  one  creditor,  the  construction  of  the  entry 
will  be 

Br. 


To. $000 

That  is,  the  name  of  the  debtor  will  be  written  on  first  blank 
line,  and  the  name  of  the  creditor  to  the  right  on  the  next  line. 
To  being  written  immediately  under  Dr. 

SECOND  FORM. 

If  one  debtor  and  two  or  morp  ^editors,  the  construction  will 
beT" 

DR.  TO  SUNDRIES,  $000 

„•-  $000 


The  name  of  the  debtor  will  appear  on  first  line,  with  Dr.  To 
Sundries  on  same  line,  followed  by  the  name  of  each  creditor  on 
a  separate  line  under  the  word  /Sundries. 

THIRD  FORM. 

If  two  or  more  debtors  and  one  .creditor,  the  construction  will 
be  the  reverse  of  second  form*  that  is,  Sundries  Dr.  To  will  ap- 
pear on  first  line,  followed  on  same  line  by  the  name  of  the  credi- 
tor, and  the  name  of  each  debtor  will  appear  immediately  under 
Sundries,  each  occupying  a  separate  line,  as  follows : 

SUNDRIES  DR.  TO  '-  $000 

^  $000 

^  $000 

FOURTH  FORM. 

This  is  the  most  complicated  Journal  entry  that  can  be  made, 
and  will  contain  two  or  jagradebtors  jind  two  or  jmce_  creditors, 
the  construction  of  which  will  be : 


A  COMMON-SENSE  VIEW  OF  BOOKKEEPING.  35 

SUNDRIES  DR.  TO  SUNDRIES. 


$000 
$000 


To  $000 


The  names  of  the  debtors  appearing  first  each  on  a  separate  line, 
and  the  names  of  the  creditors  to  the  right  in  the  order  of  blank 
lines,  each  also  occupying  a  separate  line.  The  term  Sundries 
never  appears  on  aline  by  itself,  except  in  Fourth  Form,  in  which 
it  occurs  twice. 

There  is  one  feature  peculiar  to  all  Journal  entries  ;  that  is,  the 
debtors  always  appear  h'rst,  and  the  creditors  as  far  to  the  right  as 
the  figures  in  the  right-hand  or  credit  column  are  from  the  figures 
in  the  left-hand  or  debit  column  on  a  straight  line  throughout 
the  page.  Two  accounts  should  not  appear  on  the  same  line. 

In  posting  from  the  Journal  we  dispose  of  each  account  in  the 
order  in  which  it  occurs  in  the  entry.  ''Sundries"  is  not  an 
account,  but  a  figure-head  indicating  two  or  more  accounts  are 
under  consideration  In  Fourth  Form,  therefore,  the  first  account 
in  the  entry  would  be  the  one  occupying  the  position  of  first 
blank  line,  in  posting  which,  we  would  say  it  is — Debtor  to 
Sundries — being  debtor  to  each  of  the  two  on  the  right.  We 
proceed  in  the  same  way  in  disposing  of  the  remaining  debtors,  and 
in  the  account  on  the  Ledger  for  each  creditor  we  would  say — 
By  Sundries — meaning  each  is  credited  by  each  of  the  two  or 
.*nore  debtors. 

Let   it  be  borne   in    mind    that  every  double  entry  has  two 
parts — a  first  part  and  a  counterpart.     The  first  part  of  the 
entry  is  transferred  to  the  Ledger  just  as  it  reads  in  the  original 
entry,  and  the  counterpart  the  reverse  of,  or  opposite  to,  first  part. 
See  paragraph  23,  page  161.     In  posting  from  the  Journal,  both 
arts  are  transferred,  and  it  is  easily  understood  ;  but  as  we  post 
the  counter  part  from  either  side  of  the  Cash  book  for  the 
being, — t\\e  first  part  being  posted  at  the  end  of  the  month  in 
the  totals, — and  in  posting  from  the  Sales  book  the  first  part  only 
is  disposed  of,  the  counter  part  being  considered  at  the  end  of  the 
month,  the  mind  of  the  student  becomes  confused  until  it  dis- 
tinguishes the  difference  between  the  first  part  and  the  counter 
part  from  the  Ledger  point  of  view. 

^rhe  explanation  of  all  entries  follows  the  Personal  accounts  ; 
that  is,  after  each  Personal  a  statement  of  the  facts  in  its  case  will 
be  made  as  briefly  as  possible,  giving  each  item  affecting  it  which 
will  also  explain  the  same  items  in  the  case  of  all  others.  For  a 
better  understanding  of  this  explanation,  see  miniature  Journal. 


36  BOOKKEEPING   SIMPLIFIED. 


DEBTOR   AND   CREDITOR. 

Double  Entry  bookkeeping  is  a  system  of  debits  and  credits  ac- 
cording to  fixed  principles,  reducing  them  to  a  state  of  mathemati- 
cal equilibrium.  It  does  not  require  a  knowledge  of  double  entry 
to  enable  any  one  to  understand  when  an  individual  or  firm  is 
either  a  debtor  or  a  creditor,  but  it  is  difficult  for  the  inexperi- 
enced to  comprehend  how  an  inanimate  impersonation  can  be 
either  one  or  the  other. 

In  fact,  the  late  Prof.  Marsh,  the  oldest  writer  in  this  country 
on  the  subject  of  Bookkeeping,  whose  works  are  accepted  author- 
ity, says,  "  Nothing  is  more  absurd  to  my  mind  than  to  say  one 
thing  is  debtor  to  another.  One  is  debtor  to  us  and  we  are  debtor 
to  the  other."  It  is  perfectly  clear  to  the  writer,  however,  even 
in  view  of  the  foregoing  enunciation  to  the  contrary,  that  if  things 
possess  the  properties  of  owing  us  and  being  owed  by  us,  on  the 
same  principle  they  can  also  owe  each  other,  at  least  from  a  book- 
keeping standpoint,  there  being  no  assignable  reason  why  they 
lose  their  individuality  when  disconnected  from  the  pronouns  we 
and  us. 

We  are  fully  borne  out  in  this  conclusion  by  the  following 
sensible  article  on  Debtor  and  Creditor,  appearing  in  an  old  trea- 
tise on  Bookkeeping,  in  which  the  writer  quoted  from  the  Dublin 
Review.  It  is  given  verbatim. 

"  He  commences  by  supposing  that  the  merchant  commits  hi& 
affairs  to  a  number  of  clerks,  assigning  to  each  clerk  the  care  of 
one  particular  branch  of  the  business,  instead  of  opening  an 
account  to  represent  it.  Thus  he  supposes  the  business  of  attend- 
ing to  the  receipt,  expenditure,  and  safe-keeping  of  the  merchant's 
cash  be  confided  to  one  clerk,  whom  we  shall  call  Cash  ;  that  of 
superintending  the  merchandise  transactions  to  another  clerk 
named  Merchandise,  etc.  These  clerks,  of  course,  are  representa- 
tives of  the  merchant  or  other  person  who  employs  them.  They 
are  therefore  accountable  to  him  for  every  item  of  his  property 
which  they  receive,  and  are  relieved  of  this  accountability  when 
they  part  with  the  property  intrusted  them. 

Bearing  this  in  mind,  let  us  suppose  that  goods  to  the  amount 


A   COMMON-SENSE   VIEW   OF   BOOKKEEPING.  37 

of  $300  are  purchased,  one  half  of  which  is  paid  in  cash,  and  for 
the  remaining  half  the  merchant  gives  his  note.  The  goods  when 
received  are  of  course  delivered  to  '  Merchandise.'  He  is  account- 
able for  them.  He  therefore  becomes  a  debtor.  But  to  whon? 
is  he  debtor  ?  Undoubtedly  '  Cash  '  and  '  Bills  Payable,'  because 
both  of  these  clerks  have  made  payments  on  his  account,  and  for 
making  these  payments  they  have  received  no  consideration. 
There  can  be  no  difficulty  in  comprehending  this,  for  the  student 
know  that  if  he  pays  money  for  a  friend  from  his  own  funds,  his 
friend  becomes  a  debtor  to  him  for  the  amount  paid,  and  he  of 
course  is  his  friend's  creditor.  Let  us  look  at  the  other  side  of 
the  transaction.  '  Cash '  is  called  upon  to  pay  on  behalf  of  '  Mer- 
chandise '  $150.  He  owes  i  Merchandise '  nothing,  neither  has 
the  latter  furnished  him  with  funds  with  which  to  make  the  pay- 
ment. '  Cash,'  who  is  accountable  for  all  the  money  he  has  on 
hand,  is  relieved  of  this  accountability  to  the  amount  of  $150. 
He  is  a  creditor,  and  a  creditor  of  c  Merchandise.'  Hence  the 
Journal  entry  of  this  transaction  will  be  : 

MERCHANDISE  DR.  TO  SUNDRIES $300 

To  Cash $150 

To  Bills  Payable 150 


Let  us  take  another  transaction.  Suppose  the  merchant  sells 
goods  to  the  amount  of  $497,  and  receives  in  payment,  cash  $200 
and  a  note  $300,  drawn  by  A  in  favor  of  B,  due  in  60  days  after 
its  receipt.  It  will  be  observed  here  that  this  note  is  not  worth 
$300  until  it  becomes  due.  To  obtain  its  present  value  we  must 
subtract  the  discount  for  60  days,  which  is  $3.  The  note  is 
therefore  worth  only  $297.  But  the  buyer  allows  the  merchant 
the  discount,  or,  in  other  words,  pays  him  $3  over  and  above 
what  is  due  him.  This  should  be  borne  in  mind. 

i  Merchandise'  delivers  up  goods  to  the  amount  of  $497.  He  is 
no  longer  responsible  to  his  employer  for  that  amount  of  goods. 
How  is  he  to  show  that  he  has  rid  himself  of  this  responsibility  ? 
By  crediting  himself  for  that  amount.  Who  are  his  debtors  ? 
<  Cash '  certainly  is  a  debtor,  because  lie  is  responsible  for  the 


38  BOOKKEEPING   SIMPLIFIED. 

amount  ($200)  which  he  has  received.  He  has  increased  his  in- 
debtedness to  his  employer  $200.  With  equal  certainty  '  Cash '  i& 
debtor  to  ( Merchandise,'  because  he  received  the  $200  from  or 
for  'Merchandise'  and  gave  the  latter  nothing  for  that  amount. 
He  owes  '  Merchandise '  $200.  '  Bills  Receivable '  also  owes  the 
latter  $300  for  the  same  reason.  But  it  is  not  to  '  Merchandise  ' 
that  these  gentlemen  are  indebted.  Here  is  a  fourth  clerk  who  is 
to  share  in  the  transaction. 

This  cleric  is  called  i  Profit  and  Loss.'  His  duty  is  to  bear  the 
blame  whenever  any  loss  is  sustained,  and  to  receive  credit  for  all 
sums  that  are  gained  in  any  department  of  the  establishment.  Or, 
in  other  words,  he  is  debited  for  all  losses  and  credited  for  all 
gains.  If  his  employer's  pocket  be  picked,  he  is  accountable  for 
it ;  if  a  purse  be  found,  he  receives  the  credit  for  it.  But  when 
it  is  desired  to  ascertain  the  gains  or  losses  in  their  various  forms, 
this  clerk  finds  it  necessary  to  perform  some  of  his  duties  by 
deputies. 

The  deputy  who  will  take  charge  of  his  duties  in  this  transac- 
tion is  '  Discount  and  Interest.'  Of  course  his  duties  are  the  same 
as  his  principal.  Hence  he  is  entitled  to  the  credit  for  $3  that 
have  been  gained  in  this  transaction.  '  Cash '  and i  Bills  Receivable ' 
are  the  debtors,  because  they  received  the  amount  which  is  to  be 
placed  to  the  credit  of  'Discount  and  Interest.'  Hence  the  Jour- 
nal entry  of  this  transaction  will  be  the  following : 

SUNDRIES  DR.  TO  SUNDRIES. 

Cash $200  00 

Bills  Receivable..  300  00 


$500  00 

To  Merchandise $497  00 

To  Discount  and  Interest. .  3  00 


Thus  it  will  be  perceived  that  when  the  various  accounts  are 
considered  as  different  departments  in  charge  of  clerks,  repre- 
senting the  merchant,  the  propriety  of  the  rules  for  journalizing 
can  readily  be  perceived. 

The  case  is  not  different  when  we  consider  them  as  they  really 


A    COMMON-SENSE   VIEW   OF   BOOKKEEPING. 

exist.  The  account  of  Merchandise,  for  example,  is  responsible 
for  all  it  receives  ;  hence  it  should  be  debited  for  what  it  receives. 

It  is  relieved  of  its  responsibility  to  the  amount  that  it  gwes^ 
hence  it  should  be  credited  for  what  it  gives.  .  .  .  He  supposes 
at  the  end  of  the  year,  or  when  the  books  are  to  be  closed,  a 
new  clerk  called  Balance  is  appointed,  whose  duty  it  is  to  go 
round  among  the  other  clerks  for  the  purpose  of  settling  with 
them  their  accounts  with  the  merchant,  and  of  collecting  from 
them  the  amounts  in  which  they  stand  indebted  to  him.  A  few 
examples  will  illustrate  these  remarks. 

Let  us  suppose  that  the  clerk  who  has  charge  of  Cash  account, 
has  received  during  the  year  $2,000,  and  paid  out  during  the 
same  time  $1,700.  When  'Balance'  comes  round,  and  desires 
kirn  to  present  his  account,  it'  is  ascertained  that  he  (Cash)  is 
accountable  for  $300.  In  order,  therefore,  to  close  his  accounts, 
he  must  deliver  to  '  Balance,'  who  is  the  agent  of  his  employer, 
the  $300  remaining  in  his  hands.  When  '  Balance  '  receives  the 
amount,  'Cash'  debits  'Balance,'  and  credits  himself  for  the 
amount.  Hence  the  closing  entry  of  '  Cash '  will  be  'By  Balance, 
$300.' 

Again,  suppose  clerk  in  charge  of  Merchandise  account  be  re- 
quired to  settle  with  Balance.  He  finds  upon  examination  that 
the  amount  of  the  Dr.  side  of  his  account,  or  the  amount  of  goods 
purchased,  is  $1,000,  and  that  the  amount  of  Cr.  side,  or  goods 
sold,  is  $400.  Upon  taking  an  account  of  stock,  valuing  the  goods 
on  hand  at  cost  prices,  he  finds  that  the  value  of  goods  unsold,  for 
which  he  is  accountable,  is  $800.  He  clears  himself  of  this 
accountability  by  delivering  that  amount  to  '  Balance,'  debiting 
Balance  and  Crediting  himself  for  the  same.  Hence  on  the 
Credit  side  of  the  account  he  writes  'By  Balance,  $800.'  But  we 
are  not  yet  done  with  this  account.  It  will  be  observed  that  Mer- 
chandise clerk  received  goods  to  the  amount  of  $1,000,  and  sold 
a  certain  portion  of  them,  which  cost  $200,  thus  keeping  a  balance 
of  $800  worth  on  hand.  But  he  sold  for  $400  the  goods  which 
cost  $200.  Therefore  he  sold  them  at  $200  profit.  Hence  '  Pro- 
fit and  Loss'  must  get  credit  for  $200,  and  Merchandise  is  Dr.  for 
that  amount.  We  have  before  explained  the  office  of  '  Profit  and 
Loss  ;'  we  will  merely  state,  therefore,  that  in  the  case  before  us 


40  BOOKKEEPING   SIMPLIFIED. 

the  closing  entry  on  Dr.  side  will  be  '  To  Profit  and  Loss,  $200.' 
Balance  must  be  debited  for  the  amount  of  goods  on  hand  ($800), 
and  hence  in  no  other  way  can  the  account  be  made  to  exhibit  a 
true  statement  of  affairs  than  by  crediting  '  Profit  and  Loss '  for 
the  gain. 

This  will  be  the  more  evident  when  we  consider  that  the  Mer- 
chandise clerk  receives  no  cash  for  the  goods.  The  receiving  of 
money  belongs  to  the  Cash  Clerk's  department.  Merchandise 
therefore  is  accountable  only  for  the  goods  that  he  has  sold,  or 
for  the  amount  which  they  cost.  The  profit  on  the  goods  sold  is 
therefore  to  be  considered  in  the  same  light  as  money  that  has 
been  found  or  received  as  a  gift. 

"We  will  next  take  for  illustration  a  personal  account.  We  will 
suppose  that  the  cleric  in  charge  of  Smith,  Jones  &  Co.'s  account 
be  called  upon  by  Balance  to  settle  the  same.  Upon  examining  the 
account,  he  finds  that  during  the  year  the  amount  of  S.,  J.  & 
Co.'s  debts  to  him  as  the  agent  of  his  employer  to  be  $2,500,  and 
the  amount  of  their  credits  $1,500.  The  amount  still  due  by 
that  firm  is  therefore  $1,000.  The  clerk  in  charge  of  the  account 
is  responsible  for  this  amount.  He  rids  himself  of  the  responsi- 
bility by  delivering  his  claim  upon  said  firm  to  '  Balance.'  He 
must  get  credit  for  this  transfer;  hence,  'Balance'  becomes  his 
debtor,  and  the  account  is  closed  by  the  following  entry :  '  By 
Balance,  $1,000.' 

Let  us  suppose,  however,  that  the  account  of  the  same  firm 
stands  thus :  amount  of  debits,  $1,500  ;  amount  of  credits,  $2,500 ; 
leaving  the  clerk  indebted  to  the  firm  in  the  sum  of  $1,000.  The 
cleric  can  settle  his  account  in  no  other  way  than  by  acknowledg- 
ing his  indebtedness ;  hence  he  becomes  Dr.  to  Balance,  arid  the 
closing  entry  will  be,  '  To  Balance,  $1,000.'  We  think  that  the 
explanations  which  we  have  given,  or  rather  those  which  we  hava 
adopted,  render  the  subject  sufficiently  clear  to  the  student." 


A   COMMON-SENSE   VIEW   OF   BOOKKEEPING.  41 


BOOKS   NECESSARY  TO  COMPLETE  A  SET. 

In  every  well-regulated  mercantile  business  where  books  are 
kept  by  Double  Entry  we  find  four  principal  records,  called  CASH 
BOOK,  SALES  BOOK,  JOURNAL,  and  LEDGER  ;  in  addition  to  which 
there  are  a  great  many  auxiliaries,  such  as  BILLS  RECEIVABLE, 
BILLS  PAYABLE  (usually  kept  within  the  same  covers,  one  in 
front  part  and  the  other  in  the  back),  CHECK  BOOK,  PASS  BOOK, 
RECEIPT  BOOK,  ACCOUNTS  RECEIVABLE,  ORDER  BOOKS,  etc.,  every 
branch  of  business  suggesting  books  adapted  to  its  wants  peculiafr 
•to  itself. 

The  CASH  BOOK,  SALES  BOOK,  arid  JOURNAL  are  books  of  original 
•entry,  from  each  of  which  we  transfer  the  dates,  names,  and 
.amounts  into  the  LEDGER — a  process  called  posting. 

We  maintain  that  all  the  four  principal  books  are  indispensable 
to  convenience  for  ready  reference,  each  being  designed  for  a 
special  purpose — id  est,  a  record  of  all  facts  of  a  kindred  nature. 

For  small  business  purposes  they  might  all  be  combined  in  one 
general  record  constituting  a  Ledger  of  both  original  and  final 
'entry  serving  the  purpose  of  each. 

Bookkeepers  of  limited  experience  would  deem  such  a  book  an 
ingenious  device  conveniently  adapted  to  the  requirements  of  any 
business.  In  a  business  of  any  magnitude,  however,  where  intricate 
transactions  are  constantly  multiplying,  the  number  of  books 
would  more  likely  be  increased  than  diminished,  to  undertake  to 
keep  a  record  of  every  transaction  on  one  book  in  such  a  business 
would  be,  to  say  the  least,  a  reductio  ad  absurdum — exeunt 
•"  Westlian"  theories. 

In  the  following  set  each  of  the  above-named  books  has  been 
•described,  and  a  full  explanation  given  of  the  many  current  en- 
tries therein  contained,  embracing  a  great  variety  of  such  entries 
as  have  come  within  the  writer's  experience  during  an  unintermpt- 
•ed  and  successful  career  as  bookkeeper,  cashier,  correspondent, 
.and  manager  for  some  of  the  leading  firms  in  the  metropolis,  in 
almost  every  branch  of  business,  covering  a  period  of  eleven  years. 

We  close  the  set  at  the  end  of  the  second  month,  assuming  we 


42  BOOKKEEPING   SIMPLIFIED. 

have  gone  over  twelve  months  in  the  same  way  ;  that  is  to  say,  the 
current  entries  and  monthly  closing  for  the  next  ten  months 
would  be  made  in  the  same  manner  as  exemplified  in  the  two 
months  through  which  the  books  have  been  conducted. 

It  is  perfectly  safe  to  assume  that  if  we  can  keep  the  books  of 
any  concern  for  two  months  we  could  keep  them  as  long  as  the 
business  continued ;  for  during  the  first  sixty  days  we  have  re- 
corded every  kind  of  a  transaction  that  is  likely  to  take  place,  and 
have  established  a  routine  for  disposing  of  them,  after  which  it  is 
mostly  repetition  during  the  continuance  of  the  business;  the 
main  features  of  the  mercantile  business  being  buying  and  selling 
goods  for  cash  and  on  account,  making  settlements  by  note  and  by 
draft,  discounting  paper,  etc. 


RULE  FOR  OPENING  BOOKS. 

Credit  each  partner  by  the  amount  of  his  investment,  and 
charge  each  with  the  amount  of  his  individual  indebtedness  to  be 
assumed  and  paid  by  the  firm.  Men  forming  a  copartnership 
and  entering  into  business  furnish  their  bookkeeper  with  a 
statement  of  their  joint  effects,  showing  nature  and  amount 
of  each  partner's  investment  from  which  to  form  his  entries- 
The  amount  of  cash  invested  by  each  would  be  placed  at  their 
credit  by  entering  their  name  on  debit  side  of  Cash  Book  and  the 
amount  opposite  in  the  Sundries  column  ;  all  other  investments 
require  entry  in  the  Journal. 

As  an  example,  we  suppose  that  two  gentlemen,  "I.  Catchem" 
and  "  U.  Cheatem,"  form  a  copartnership,  each  investing  $10,000 
cash,  the  former  also  investing  office  furniture,  counters,  shelving,. 
etc.,  inventoried  at  $900,  which  would  be  represented  by  an 
"  Office  Furniture  and  Fixtures"  account.  The  latter  gentleman 
would  turn  over  to  the  new  firm  $1,000  worth  of  goods  such  a& 
they  are  going  to  deal  in,  and  which  of  course  would  be  repre- 
sented by  "Merchandise"  account. 

The  cash  invested  by  each  would  be  passed  to  their  credit  on 
Dr.  side  of  Cash  Book,  as  explained  above,  and  the  balance  of  their 


A    COMMON-SENSE   VIEW   OF   BOOKKEEPING.  43 

investment  would  be  passed  to  their  credit  in  the  following  Jour- 
nal entry,  viz.: 

SUNDRIES  DR.  TO  SUNDRIES. 

Office  Furniture  and  Fixtures 900 

Merchandise 1,000 

To  I.  Catchem 900 

"  U.  Cheatem 1,000 

as  per  inventory  (or  Stock  Book). 

All  other  investments  would  be  disposed  of  in  the  same  Journal 
entry  by  charging  them  to  some  appropriate  name  adopted  as  an 
account  to  represent  their  value. 


"STOCK."* 


The  Ledger  is  opened  witli  partner's  Stock  or  Capital  account 
on  first  page,  followed  by  the  rest  of  the  accounts  as  they  occur 
in  the  original  entry. 


RULE  FOR  CLOSING  BOOKS. 

Before  closing  t\\e  Ledger  we  "  take  stock"  and  credit  Merchan- 
dise account,  usually  in  red  ink,  by  Inventory,  after  which  it  is 
a  matter  of  a  very  few  moments  to  arrive  definitely  at  the  profits 
or  losses  of  the  business. 

All  speculative  accounts  are  disposed  of  first,  being  closed  or 
merged  into  a  Profit  and  Loss  account.  If  the  debit  side  is  the 


*  Probably  the  most  absurd  thing  peculiar  to  Commercial  Colleges  is  the  per- 
tinacity with  which  they  cling  to  the  nonsensical  idea  of  having  a  "Stock" 
account  to  represent  the  capital  invested  by  an  individual  when  in  business 
alone.  It  is  decidedly  better  to  open  an  account  in  the  name  of  the  proprietor 
of  any  business  by  which  to  represent  his  capital.  It  would  be  more  intel- 
ligible to  him,  and  therefore  infinitely  more  satisfactory.  Capital  Stock  is 
properly  used  to  represent  amount  paid  in  by  stockholders  in  a  corporation. 


44  BOOKKEEPING   SIMPLIFIED. 

greater,  we  write  on  the  credit  side,  By  Profit  and  Loss  in  red 
ink,  giving  the  folio  of  Profit  and  Loss  account,  then  turn  to  the 
Profit  arid  Loss  account  and  write  on  the  debit  side  in  black  ink 

To whatever  account  has  been  thus  closed,  giving  the  folio 

on  which  the  account  is  found  in  the  Ledger.  If  the  credit 
side  is  the  greater,  we  write  on  the  debit  side  To  Profit  and  Loss 
in  red  ink,  giving  Profit  and  Loss  folio  as  before  ;  then  turn  to  the 
Profit  and  Loss  account  and  write,  in  black  ink,  By what- 
ever accounts  have  been  thus  closed,  giving  their  Ledger  folio  as 
before.  This  does  away  with  the  nonsensical  operation  of  making 
Journal  entries  for  closing  such  accounts,  as  is  practised  by  nine 
tenths  of  the  bookkeepers  throughout  the  land. 

If  the  debit  side  of  Profit  and  Loss  account  is  the  greater,  the 

balance  will  show  net  loss,  and  is  closed  in  red  ink  By , 

giving  each  partner's  name  and  folio  and  pro  rata  of  the  loss. 

If  the  credit  side  of  the  Profit  and  Loss  account  is  the  greater 

the  difference  will  show  net  gain,  and  is  closed  in  red  ink,  To , 

giving  each  partner's  name,  folio,  and  pro  rata  of  gain.  The  total 
amount  of  pro  rata  gain  or  loss  will  balance  the  Profit  and  Loss 
account,  which  is  then  closed  with  red  lines  (see  remarks  on  Rul- 
ing Ledger  accounts,  page  56).  We  then  turn  to  each  partner's 
Stock  account  (assuming  the  Personal  and  Stock  account  are  both 
kept  under  the  same  heading),  and  write  in  red  ink  on  debit  side, 
in  case  of  loss,  To  Profit  and  Loss,  giving  the  folio  of  Profit  and 
Loss  account  and  the  amount  of  his  pro  rata  of  loss  ;  in  case  of  gain, 
-we  write  in  red  ink,  on  credit  side,  By  Profit  and  Loss,  giving 
folio  and  pro  rata  as  before. 

If  the  partners'  Personal  accounts  are  kept  apart  from  their 
Capital  accounts  the  Profit  and  Loss  account  would  be  closed 
into  the  former,  which  would  then  be  closed  into  the  latter  by 
the  same  process. 

We  then  close  the  partners'  Stock  accounts,  in  red  ink,  To 
Balance,  whatever  the  difference  is  between  the  debit  and  credit 
side,  which  will  represent  their  net  capital.  If  the  debit  side 
should  be  the  greater,  which  is  hardly  presumable,  we  close  it 
By  Balance,  which  will  represent  their  net  insolvency. 

All  accounts  now  remaining  open  on  the  Ledger  will  represent 
•either  Resources  or  Liabilities.  All  those  in  which  there  is  a 


A   COMMON-SENSE    VIEW    OF   BOOKKEEPING.  45 

debit  balance  will  represent  Resources,  and  are  closed  in  red  ink, 
— By  Balance, — whatever  the  difference  is  between  the  debit 
and  credit  side.  All  those  in  which  there  is  a  credit  balance  will" 
represent  Liabilities,  and  are  closed,  in  red  ink, — To  Balance, — 
for  the  difference  between  the  two  sides.  The  difference  be- 
tween total  amount  of  Resources  and  total  amount  of  Liabilities 
must  agree  with  the  sum  total  of  differences  in  the  partners'  Capi- 
tal accounts.  If  the  Resources  are  the  greater,  the  difference 
will  represent  the  firm's  net  capital,  which  is  composed  of  the 
partners'  net  capital  as  indicated  by  their  Stock  accounts.  If  the 
Liabilities  are  the  greater,  the  excess  will  represent  the  firm's  net 
insolvency,  and  will  show  overdraft  in  the  capital  account. 

It  is  of  vital  importance  to  the  interests  of  all  parties  concerned 
in  any  business  to  know  how  to  close  books  correctly,  adjusting 
the  profits  or  losses,  showing  resources  and  liabilities,  net  worth  or 
insolvency. 


RULE  FOR  REOPENING  BOOKS. 

Bring  down  the  balance  on  the  opposite  side  to  where  it  ap- 
pears in  red  ink,  as  a  closing  entry,  in  the  partners'  stock  accounts, 
all  Personal  and  Representative  accounts,  also  the  Inventory  in 
the  Merchandise  and  other  accounts  of  dual  nature.  If  there  is 
not  likely  to  be  enough  space  left  in  the  old  Ledger  to  last  until 
the  next  closing,  the  balance  in  each  account  to  be  reopened  will 
be  transferred  to  a  new  Ledger.  As  fast  as  the  books  of  the  old 
set  are  used  up  they  are  replaced  with  new  ones ;  hence  it  be- 
comes necessary  to  have  a  serial  number  or  letter  to  show  which 
set  each  book  belongs  to,  so  they  can  easily  be  identified  when  it 
becomes  necessary  to  refer  to  them.  The  books  of  the  first  set 
would  be  marked  Ledger  A,  Cash  Book  A,  Journal  A,  and  Sales 
Book  A,  and  the  next  book  of  either  name  would  be  marked  B, 
and  so  on,  as  new  books  were  needed. 

In  closing  Ledger  A  for  the  last  time  we  say — To  (or  By) 
Balance  to  Ledger  B — giving  the  folio  on  Ledger  B  to  which 
the  balance  has  been  transferred,  and  on  Ledger  B  we  say — To* 


46  BOOKKEEPING   SIMPLIFIED. 

(or  By)  Balance  from  Ledger  A — giving  the  folio  on  Ledger 
A  from  which  the  balance  was  brought. 


HOW  TO   REFER  TO  ACCOUNTS  IN  THE  LED- 
GER READILY  WITHOUT  THE  INDEX. 

Ledger  B  would  be  opened  from  the  last  Trial  Balance  ;  in 
opening  which,  therefore,  we  know  how  many  accounts  we  have 
to  transfer ;  if  a  great  many,  we  arrange  them  alphabetically, 
leaving  several  pages  after  each  letter  of  the  alphabet  for  all  new 
names  that  may  be  introduced  beginning  with  same  initial  letter. 
This  arrangement  will  enable  us  to  refer  to  them  readily  without 
using  the  index,  and  soon  be  able  to  locate  on  the  Ledger  from 
memory  each  account  within  a  few  pages,  greatly  facilitating  our 
posting.  It  is  by  this  method  that  Bank  Bookkeepers,  who  often 
have  several  thousand  accounts  on  their  Ledger,  are  able  to  post 
so  rapidly,  and  find  the  account  on  the  Ledger  in  the  same  time 
it  would  require  to  find  it  in  the  Index. 


CHANGING   SINGLE   INTO   DOUBLE    ENTRY. 

The  difference  between  single  entry  and  double  entry  is,  the 
former  affects  only  one  account,  which  is  that  of  a  person,  and 
which  may  be  either  a  debtor  or  a  creditor,  and  in  the  latter,  two 
or  more  accounts  must  be  affected,  which  may  be  either  that  of  a 
person,  property,  or  percentage,  part  debtors  and  part  creditors. 

To  rearrange  single  entry  books  on  the  double  entry  plan, 
they  must  first  be  closed,  and  the  profit  or  the  loss  up  to  that 
time  adjusted  according  to  the  following 

FOURTEEN  RULES. 

1st.  Take  stock,  that  is,  make  an  inventory  which  will  include 
all  the  property  of  the  business. 

2nd.  Draw  off  list  of  names  of  everybody  owing  the  firm,  and 
the  amount  according  to  the  old  Ledger. 


A   COMMON-SENSE   VIEW    OF   BOOKKEEPING.  47 

3rd.  Make  out  a  list  of  other  people's  notes  on  hand,  as  per 
Bill  Book,  if  one  has  been  kept,  otherwise  from  the  notes  them- 
selves ;  if  from  the  Bill  Book,  verify  it  any  way  by  the  notes 

4th.  See  how  much  cash  there  is  on  hand,  including  money 
in  Bank  and  in  the  drawer.  Add  the  four  results  together. 

5th.  Draw  off  a  list  of  the  names  of  everybody  the  firm 
owes,  and  the  amount  according  to  the  old  Ledger,  and  bills  not 
entered. 

6th.  Make  out  a  list  of  the  firm's  notes  outstanding,  as  per 
Bills  Payable  Book.  Add  the  two  results  together. 

7th.  To  make  a  long  story  short,  find  out  the  firm's  assets  ac- 
cording to  first  four  rules,  and  the  firm's  liabilities  according  to 
the  5th  and  6th  rules,  and  find  the  difference  between  the  two 
results. 

8th.  If  the  resources  are  the  greater,  it  will  show  the  firm's 
present  net  capital;  and  if  the  liabilities  are  the  greater,  it  will 
show  the  firm's  net  insolvency. 

9th.  Deduct  from  the  amount  of  original  (and  subsequent  in- 
vestments.if  there  have  been  any),  the  amount  drawn  out, which  the 
Ledger  will  show  in  the  account  of  each  member  of  the  firm,  and 
deduct  this  net  result  from  foe  firm's  present  net  capital,  and  that 
will  show  their  net  gain,  which  divide  according  to  co-partnership 
agreements.  If  their  present  net  captial  should  be  less  than  that 
which  remains  of  original  capital,  the  difference  will  show  net 
loss,  which  must  be  charged  to  each  partner  according  to  agree- 
ment. 

10th.  If  either  or  all  drew  out  more  than  he  or  they  invested, 
the  overdraft  must  be  added  to  the  firm's  assets,  which  will  in- 
crease their  net  gain,  or  diminish  their  net  loss,  as  the  case  may 
be. 

llth.  Add  what  each  one  has  made  to  his  original  capital,  and 
deduct  therefrom  the  amount  he  has  withdrawn,  or  add  what  he 
has  lost  to  amount  drawn  out,  and  deduct  it  from  original  capital, 
and  that  will  show  how  much  he  has  remaining  in  the  business, 
and  his  net  capital  for  the  double  entry  Ledger. 

12th.  Make  the  following  journal  entries  of  Fourth  Form  in 
•case  of  two  (or  more)  partners. 


48  BOOKKEEPING   SIMPLIFIED. 

Sundries  Dr.  To  Sundries 
Accounts  Receivable  (as  per  old  Ledger) 
Bills  Receivable          (as  per  Bill  Book) 
Cash  (as  per  Cash  Book) 

Mdse.  (as  per  Inventory) 

Office  Furniture  (as  per  Inventory) 

To (Senior  partner's  name) 

" (Junior         "  "     ) 

Each  partner's  credit  will  be  his  pro  rata  of  the  total  assets,, 
which  will  be  ascertained  by  multiplying  the  total  assets  by  his 
net  capital,  as  per  rule  llth,  and  dividing  the  product  thus  ob- 
tained by  the  total  capital  of  both  partners. 

Sundries  Dr.  To  Sundries. 

(Senior's  Name) 

(Junior's  Name) 

To  Accounts  Payable  (see  old  Ledger) 
"  Bills  Payable          (see  Bill  Book) 

Each  partner's  debit  will  be  \\ispro  rata  of  the  total  liabilities,, 
which  will  be  determined  by  multiplying  the  total  liabilities  by 
each  one's  net  capital,  and  dividing  the  product  thus  obtained  by 
their  joint  net  capital.  The  difference  between  the  total  debit  and 
the  total  credit  of  the  partners'  account  will  agree  with  the  result 
reached  by  rule  8th  (or  9th,  as  the  case  may  be). 

13th.*  Open  Cash  Book  by  entering  on  the  debit  side  To 
Balance,  placing  the  figures  in  the  amount  column,  so  they  will 
not  be  posted  from  this  book. 

14th.  Bring  down  the  balances  in  the  personal  accounts  ac- 
cording to  RULES  FOR  REOPENING  BOOKS  on  page  45.  Open  an  ac- 
count for  Bills  Receivable,  and  one  for  Bills  Payable,  charging 
the  former  and  crediting  the  latter  from  the  Journal  entries. 
Open  accounts  for  Office  Furniture,  Cash,  and  Merchandise,. 
all  of  which  charge  also.  If  the  Inventory  includes  horses  and 
wagons  used  in  carrying  on  the  business,  open  an  account,  called 
Horse  and  Wagon  if  only  a  few  of  either,  but  if  many  of  each, 
have  two  accounts,  one  Live  Stock,  and  one  Rolling  Stock.  If 
the  Inventory  includes  houses  and  lots,  open  Real  Estate  account 
same  way  for  any  different  kind  of  property,  all  of  which  new  ac- 
counts would  appear  in  the  first  Journal  entry  under  Sundries. 
Debtor. 


A   COMMON-SENSE   VIEW   OF   BOOKKEEPING.  49 

It  is  surprising  to  know  to  what  extent  Single  Entry  bookkeep- 
ing is  practised  even  in  houses  doing  a  large  business,  because 
business  men  themselves  are  ignorant  of  the  superiority  of  Double 
Entry,  and  therefore  permit  their  bookkeepers  to  go  stumbling 
on  from  year  to  year  making  innumerable  mistakes,  many  of 
which  are  never  discovered,  and  eventually  guessing  (it  cannot  be 
considered  otherwise  than  as  guessing)  at  a  final  result. 

In  Double  Entry  we  guess  ^absolutely  nothing,  but  know  defi- 
nitely what  we  are  doing.  All  mistakes  that  have  been  made 
during  each  month  will  be  detected  on  getting  off  the  Trail  Bal- 
ance, and  must  be  rectified  before  going  ahead  with  the  posting 
of  a  new  month. 


RULES    FOR    DETECTING    ERRORS    IN  TRIAL 

BALANCE. 

1.  Go  over  the  additions  of  the  Trial  Balance,  assuring  your- 
self they  are  correct. 

2.  Ascertain  the  exact  difference  and  look  casually  through  the 
books  of  original  entry  for  all  amounts  similar  to  the  amount  of 
error,  seeing  that  they  have  been  posted  on  both  debit  and  credit 
side  of  the  Ledger. 

3.  Examine  the  addition  of  the  outside  column  in  the  Sales 
Book,  observing  that  the  footing  has  been  posted  on  the  credit 
side  of  the  merchandise  account  in  the  Ledger. 

4.  Examine  the  Journal  entries  to  see  that  each  entry  balances. 

5.  See  if  you  have  transferred  the  amounts  correctly  from  the 
Ledger  to  the  Trial  Balance,  going  carefully  over  the  footings  of 
each  account  in  the  Ledger  and  taking  the  difference. 

6.  Check  the  posting  ;  that  is,  see  if  the  amounts  have  all  been 
transferred  correctly  from  each  of  the  books  of  original  entry  into 
the  Ledger. 

7.  Go  over  the  Ledger  accounts  again  and  see  if  each  amount 
on  both  debit  and  credit  side  has  been  checked.    Those  not  checked 
have  been  posted  erroneously  and  will  doubtless  prove  to  be  thq 
amount  of  difference  in  your  Trial  Balance. 

If  the  error  is  not  found  after  going  over  the  seven  rules, 


50  BOOKKEEPING   SIMPLIFIED. 

with  rule  1  and  go  over  them  again  and  again  until  you  have 
found  it. 


RULES   FOR   MAKING   "BALANCE  SHEET." 

A  Balance  Sheet  is  a  iinal  exhibit  showing  gains  or  losses,  assets 
and  liabilities,  net  capital  or  insolvency. 

1.  Rule  the  three  horizontal  lines  at  the  top  of  the  sheet  in 
red  ink,  two  double  and  one  single. 

2.  Rule  the  perpendicular  lines  forming  two  columns  for  Trial 
Balance,  extending  over  one  line  for  each  partner's  stock  and  per- 
sonal accounts,  one  line  for  each  speculative  and  representative 
account,  one  line  each  for  total  accounts  receivable  and  total  ac- 
counts payable,  and  one  for  the  footing. 

3.  Rule  the  column  for  inventory,  terminating  on  same  line 
with  Trial  Balance  column. 

4:.  Rule  two  columns  for  Profit  and  Loss,  extending  as  many 
lines  below  the  inventory  footing  as  there  are  partners,  including 
one  line  each  for  total  gains  and  total  losses  ;  also  one  for  the  foot- 
ing. 

5.  Rule  two  columns  for  each  partner,  the  first  two  extending 
two  lines  below  the  last  footing,  one  being  for  net  capital  and  the 
other  for    the  footing;  the  next    two  columns   extending  two 
lines  below  the  last  footing,  for  the  same  reason ;  and  so  on  with 
each  succeeding  partner's  column. 

6.  Rule  two  columns  for  the  balances,  extending  as  many  lines 
below  the  footing  of  last  column  as  the  Profit  and  Loss  columns 
extend  below  the  footing  of  the  Inventory  column,  one  line  being 
for  total  assets  and  one  for  total  liabilities,  and  one  for  each  part- 
ner's capital,  and  one  for  the  final  footing.     See  page  116. 


RULE   FOR   THE   USE   OF   RED   INK. 

There  is  nothing  arbitrary  in  the  use  of  red  ink ;  it  can  be  used 
or  dispensed  with  at  the  option  of  the  bookkeeper.  Good  taste, 
however,  requires  that  it  should  be  used  in  making  all  closing 


A   COMMON-SENSE   VIEW   OF   BOOKKEEPING.  51 

entries,  ruling,  all  reference  to  transferring  amounts  to  or  from 
another  page,  crediting  merchandise  l>y  inventory,  crediting 
partners  with  gain  or  charging  them  with  loss. 

Books  should  be  kept  neatly  and  artistically  as  well  as  correctly. 
There  is  nothing  more  enhancing  to  the  beauty  of  a  set  of  books 
than  proper  distribution  of  red  ink ;  while  there  are  many  book- 
keepers who  do  not  use  it  at  all,  there  are  others  who  use  it  too 
profusely :  in  neither  case  will  their  books  compare  in  beauty 
with  those  governed  by  the  foregoing  rules. 

A  single  red  line  separates  things  that  are  related  ;  a  double  red 
line  separates  things  not  related,  and  indicates  they  go  no  further. 


CASH   BOOK. 

If  one  book  be  of  more  importance  than  another,  the  Cash  Book 
should  have  the  precedence,  being  not  only  a  record  in  detail  of 
all  money  handled  by  the  firm,  but  also  a  Ledger  account  of  the 
Cash,  as  it  were. 

This  book  has  a  special  ruling  peculiar  to  itself,  with  spaces 
and  columns  designed  to  show  certain  facts. 

THE  DEBIT  SIDE 

shows  amount  of  Cash  received,  date  of  receipt,  who  received 
from,  and  what  received  for  ;  the  first  column  on  the  left  being 
for  date,  first  space  after  date  being  for  Ledger  accounts  which 
are  to  be  credited  by  Cash  ;  the  next  space  is  for  explanations  or 
particulars  of  the  transaction,  which  should  never  extend  beyond 
the  bounds  on  either  side. 

The  columns  for  amounts  should  each  be  headed  with  the 
name  of  accounts  they  represent,  or  show  the  purpose  for  which 
each  is  designed. 

THE  CREDIT  SIDE 

shows  the  amount  of  cash  paid  out,  to  whom  or  for  what  account, 
and  for  what  purpose  it  was  paid ;  also  date  of  payment,  with 
spaces  same  as  on  debit  side.  In  posting  from  the  Cash  Book 
we  post  only  the  amounts  found  in  the  Sundries  columns,  and 


52  BOOKKEEPING   SIMPLIFIED. 

the  footings  of  the  Special  columns.  Cash  Debtor  (or  Dr.  Cash) 
being  written  at  the  top  of  page  on  left-hand  side  is  read  or  under- 
stood in  connection  with  every  name  appearing  on  that  side  in  the 

space  for  Ledger  accounts.  We  then  say,  Cash  being  debtor  to , 

whatever  account  follows,  the  Contra  is,  that  account  in  the  Led- 
ger must  be  credited  according  to  the  law  of  Double  Entry  (page 
29).  Cash  being  posted,  as  it  were,  in  the  Cash  Book,  which  re- 
presents the  Ledger  Cash  account,  we  consider  only  half  the  entry 
or  the  credit  account  in  posting. 

On  the  other  side,  Cash  Or.  being  written  at  the  top  of  the 
page  is  read  or  understood  in  connection  with  every  name  ap- 
pearing on  that  side  in  the  space  designed  for  Ledger  accounts 
that  are  to  be  debited  in  posting,  and  which  alone  are  considered 
in  posting,  Cash  Or,  being  already  posted,  as  it  were,  in  the  Cash 
Book  representing,  as  we  have  seen,  the  Ledger  account  of  Cash. 

In  posting  from  the  Cash  Book,  therefore,  we  post  only  half 
the  entry  on  either  side,  observing  the  date  of  entry  and  amounts, 
studiously  avoiding  the  explanations,  thereby  preventing  confu- 
sion. * 

SPECIAL  COLUMNS. 

The  object  of  Special  columns  is  to  economize  time  and  labor  in 
posting ;  the  more  Special  columns  we  have  the  less  posting  will 
have  to  be  done.  The  number  of  such  columns  will  be  deter- 
mined by  the  number  of  very  active  accounts. 

A  Merchandise  column  is  introduced  in  our  miniature  Cash 
Book  (page  64),  because  we  are  supposed  to  be  making  cash  sales 
daily,  the  amount  of  which  if  carried  into  the  Sundries  column 
would  necessitate  posting  one  item  daily  in  the  Merchandise  ac- 
count, but  by  entering  it  in  a  special  column  we  are  enabled  to 
post  many  items  in  one  amount  in  the  footing  of  that  column. 
The  Expense  column  is  introduced  on  the  credit  side  for  the  same 
reason  and  managed  in  the  same  way.  The  Discount  column 
on  debit  side  of  miniature  Cash  Book  represents  all  discounts 
allowed  by  our  firm  for  money  received  before  maturity  of  the 
amount,  and  is  posted  in  connection  with  the  cash  item  on  the  cre- 
dit side  of  the  account  in  the  Ledger;  the  footing  of  the  column 
at  the  end  of  the  month  is  posted  on  the  debit  side  of  Discount 


A   COMMON-SENSE  VIEW   G^   BOOKKEEPING.  53 

in  the  Ledger,  thereby  constituting  the  double  entry.  We  also  have 
a  Discount  column  on  the  credit  side  representing  discounts  allowed 
us  for  prepayment  of  accounts,  and  each  item  is  posted  in  con- 
nection with  the  cash  item  opposite  to  the  debit  side  of  the  account 
in  the  Ledger,  the  footing  being  posted  at  the  end  of  the  month 
on  the  credit  side  of  Discount  in  the  Ledger,  thereby  constitut- 
ing the  double  entry  for  the  various  debits  of  discount  during  the 
month. 

The  Discount  columns  on  either  side  of  Cash  Book  do  not  repre- 
sent any  part  of  the  cash,  and  therefore  do  not  enter  into  the 
operation  of  balancing  the  cash  either  daily  or  monthly. 


TWO  CASH   BOOKS   UNNECESSARY. 

It  is  a  custom  in  many  houses  to  keep  two  Cash  Books,  one 
called  Petty  Cash,  representing  all  money  received  and  paid  out 
daily,  including  amount  deposited  in  bank.  This  book  is  balanced 
and  closed  every  evening,  the  balance  representing  the  amount  of 
money  in  the  safe  or  cash-drawer. 

The  bookkeeper  at  his  leisure  transcribes  the  matter  from  daily 
Cash  Book,  omitting  money  deposited,  into  a  larger  book  called 
GENERAL  CASH  BOOK,  usually  with  more  regard  for  neatness  than 
is  bestowed  on  Petty  Cash  Book,  which  is  balanced  and  closed  only 
at  the  end  of  the  month,  the  balance  representing  the  amount  of 
money  in  the  bank,  including  the  amount  in  cash-drawer.  The 
object  of  the  monthly  closing  is  to  get  the  monthly  results  for 
the  purpose  of  transferring  them  to  the  Ledger.  The  Petty  Cash 
Book  is  superfluous,  and  can  easily  be  dispensed  with  by  ruling 
two  extra  columns,  one  on  each  side  of  the  GENERAL  CASH  BOOK, 
into  which  the  result  of  each  day's  transactions  are  extended,  the 
extra  columns  only  being  balanced  and  closed,  leaving  the  main 
columns,  representing  monthly  cash,  open,  to  be  closed  at  the  end 
of  the  month. 

By  combining  the  two  books  in  one,  we  obviate  writing  the 
same  matter  twice,  saving  time  and  labor  and  the  expense  of  an 
extra  book.  It  will  not  be  necessary  to  close  the  extra  columns 


54  BOOKKEEPING   SIMPLIFIED. 

daily,  unless  a  sufficient  number  of  transactions  have  taken  place 
to  justify  the  operation.  Where  there  are  but  few  entries  on 
either  side,  closing  every  other  day,  or  even  once  a  wee*k,  will  be 
sufficient.  The  casli  should  be  proven  daily,  however. 


SALES    BOOK. 

This  book  should  contain  a  record  of  all  goods  sold  on  credit, 
or  on  account,  first  giving  the  name  of  customer,  terms  of  sale, 
and  address,  followed  by  an  itemized  account  of  the  sale. 

The  outside  column  is  footed  up  daily  on  each  page  of  the  Sales 
Book,  and  the  amount  carried  forward  to  the  next  page ;  and  so  on 
to  the  end  of  the  month,  when  the  final  footing,  representing  total 
sales  for  the  month,  will  be  posted  on  the  credit  side  of  the  Mer- 
chandise account  in  the  Ledger,  thereby  constituting  the  double 
entry  for  all  the  debits  that  have  been  made  during  the  month  in 
the  several  customers'  accounts.  This  book  is  kept  by  the  entry- 
clerk,  and  making  the  charges  thereon  is  called  entering  goods. 
The  bills  we  render  must  be  exact  duplicates  of  the  entry  on  Sales 
Book.  No  bill  should  be  made  out  first  and  copied  on  Sales  Book, 
but  entered  on  Sales  Book  first. 

All  entries  on  the  Sales  Book  are  charges  or  debits  in  the  indi- 
vidual amounts,  and  a  credit  for  the  same  amounts  collectively  at 
the  end  of  the  month.  In  making  our  entries  on  Sales  Book,  we 
begin  by  writing  the  customer's  name,  not  by  saying  "  We  have 

this  day  sold  to the  following  goods,  to  wit,"  as  the  very  fact  of 

the  entry  being  made  on  this  book  is  evidence  that  "  we  have  this 
day  sold,"  etc. ;  introductory  remarks  of  this  kind  being  peculiar 
to  the  old-fashion  Day  Book. 


JOURNAL. 

A  book  of  original  entry  containing  a  record  of  all  transactions 
that  cannot  properly  be  entered  in  Cash  Book  or  Sales  Book,  such 
as  purchases  on  account,  allowances  for  damages  or  goods  re- 
turned, settlements  by  note,  loss  by  failure  or  otherwise,  interest 


A   COMMON-SENSE   VIEW    OF   BOOKKEEPING.  55 

charges  and  credits,  transferring  from  one  account  to  another, 
et  ccetera. 

If  we  should  receive  invoices  daily  from  any  concern,~~we 
would  keep  them  on  file  until  the  end  of  each  week,  and  enter 
them  in  one  amount  instead  of  entering  them  daily.  We  would 
enter  date  and  amount  of  each  in  the  Journal  within  the  space 
for  descriptive  matter,  but  extend  the  total  amount  only  into  the 
Credit  column,  whereby  we  would  have  but  one  amount  to  post 
each  week  instead  of  six  amounts. 

Another  way  is  to  rule  special  columns  in  the  Journal  for  the 
most  active  accounts,  and  post  only  the  footing,  which  would  be 
still  greater  saving  of  time  and  labor  in  posting. 


LEDGER. 

The  Ledger  is  a  book  of  final  entry  and  general  reference — in 
fact,  the  BOOK  OF  BOOKS  in  every  business ;  it  is  the  general  re- 
ceptacle for  the  main  facts  connected  with  each  entry  through- 
out all  books  of  original  entry,  and  contains  nothing  but  matter 
supplied  through  the  channel  of  posting. 

It  would  be  decidedly  irregular,  and  probably  fatal  to  a  bal- 
ance,— the  proof  of  Double  Entry, — to  make  an  entry  in  the  Led- 
ger before  it  had  been  previously  recorded  in  one  of  the  books  of 
original  entry.  If  we  desire  to  know  how  mucli  any  one  owes 
us,  how  much  we  owe  any  one,  or  the  general  standing  of  any 
account,  we  first  refer  to  the  account  in  the  Ledger,  take  the  dif- 
ference between  the  debit  and  credit  side,  then  look  carefully 
through  all  books  of  original  entry  for  items  that  may  have 
been  entered  since  posting,  and  consider  them  as  if  posted.  The 
Ledger  is  closed  annually  or  semi-annually,  or  as  often  as  we  de- 
sire to  know  if  we  have  made  or  lost,  or  how  we  stand.  If  a 
new  partner  is  admitted  into  the  firm  the  Ledger  will  have  to 
be  closed,  and  the  profits  or  losses  up  to  that  time  adjusted  ibe<- 
tween  the  former  members  of  the  firm.  ,". 

The  period  of  time  between  each  closing  of  the  Ledger  is 
called  a  season.  A  Ledger  account  should  never  be  closed  by 


56  BOOKKEEPING  SIMPLIFIED. 

underlining  during  the  season,  unless  it  be  discontinued — not 
even  when  it  balances  by  a  concurrence  of  regular  entries,  as 
claimed  by  some  theorists ;  nor  at  bottom  of  the  page,  when  it 
becomes  necessary  to  transfer  it  to  another  page,  as  claimed  by 
many  others :  in  the  latter  case,  both  debit  and  credit  side  should 
be  footed  up,  and  the  amount  of  each,  not  the  difference  between 
the  two,  transferred  to  the  new  page.  We  can  then  see  at  a  glance 
what  amount  of  business  is  represented  by  any  account  during 
the  season — a  fact  often  necessary  to  know  in  settling  with  sales- 
men who  sell  on  commission,  or  in  paying  a  rebate  or  drawback 
to  a  customer. 


RULING  THE  LEDGER. 

The  peculiar  form  of  the  Ledger  gives  it  three  distinct  sets  or 
groups  of  perpendicular  red  lines.  On  the  extreme  left  of  each 
page  there  are  two  spaces  and  two  lines  for  date  of  debit  entries, 
followed  by  a  wider  space  for  descriptive  matter.  In  the  middle 
of  the  page  there  are  live  spaces  and  six  lines  which  constitute 
the  main  group :  the  first  space  is  for  folio  of  book  of  original 
entry,  next  two  spaces  are  for  amount  of  debit  in  dollars  and 
cents,  the  next  two  spaces  are  for  the  month  and  day  on  which 
the  credit  entries  are  made. 

On  the  extreme  right  of  each  page  there  are  three  spaces  and 
three  lines :  first  space  is  for  folio  of  books  of  original  entry,  the 
remaining  two  spaces  are  for  amount  of  credit  in  dollars  and 
cents.  It  requires  two  columns,  always,  for  dates  and  two  for 
amounts  ;  the  difference  between  the  two  is,  amounts  are  enclosed 
by  double  red  lines  and  dates  by  single  red  lines. 

In  ruling  Ledger  accounts  we  always  begin  on  that  side  on 
which  the  entries  extend  farthest  down  the  page.  Draw  a 
single  red  line  across  amount  column,  close  to  the  figures  on  that 
side,  also  across  amount  column  on  same  line  on  the  opposite  side, 
and  if  there  is  the  space  of  half  a  dozen  lines  or  more  on  the  oppo- 
site side,  not  used,  we  also  draw  on  same  line  a  single  red  line 
across  the  column  for  days  on  that  side,  as  a  basis  from  which  to 
rule  an  oblique  red  line  terminating,  on  last  line  used,  at  the  folio 


A    COMMON-SENSE   VIEW    OF   BOOKKEEPING.  57 

column  on  that  side — the  object  of  the  oblique  line  being  to 
prevent  the  insertion  of  other  amounts  and  to  give  the  book  a 
neat,  business-like  finish.  We  then  draw  a  single  red  line  across 
each  group  on  the  next  line,  doubling  it,  by  drawing  an  extra 
short  line,  under  the  amounts  only.  The  oblique  line  should 
never  terminate, on  this  line,  as  is  customary  with  nine  tenths  of 
bookkeepers,  as  it  makes  the  angle  too  acute  to  look  well. 

Never  rule  on  a  line  where  there  is  writing,  nor  write  be- 
tween lines — interline — when  it  can  be  avoided  by  use  of  the 
next  line. 


CHECK  BOOK. 

All  transactions  with  the  Bank  are  recorded  in  the  Check 
Book  which  has  no  connection  with  the  Ledger. 

Money  deposited  in  Bank  is  not  paid  out,  but  is  regarded  as 
money  on  hand,  the  Bank  representing  another  department  of 
our  cash-drawer,  as  it  were.  No  entry  is  made  in  the  Cash  Book 
of  deposits  in  Bank,  but  on  the  stub  of  Check  Book  we  enter 
date  of  deposit,  items  composing  it,  and  amount.  It  is  not  neces- 
sary to  enter  on  stub  of  Check  Book  the  name  of  the  party  from 
whom  the  check  was  received,  as  the  Cash  Book  shows  that  fact; 
it  is  strange  that  nine  bookkeepers  out  of  ten  enter  the  name 
of  every  check  on  Check  Book,  thereby  giving  themselves 
twice  the  work  without  accomplishing  any  object  whatever. 
We  add  the  amount  of  each  deposit  to  the  last  balance  in 
Bank  at  time  of  making  it,  and  deduct  amount  of  each  check 
immediately  after  drawing  it — not  wait  until  all  the  checks  on 
that  page  are  drawn,  and  deduct  the  total.  We  can  then  see  at 
a  glance  what  our  balance  is  in  bank  subject  to  draft. 

The  stub  of  Check  Book  from  which  each  check  is  detached 
should  show  to  whom  the  check  was  given,  for  what  account, 
amount,  number  and  date  of  check,  and  should  be  filled  in  with 
these  facts  before  drawing  check. 

If  a  check  is  made  payable  to  a  personal  order,  that  person 
will  have  to  be  identified  at  the  Bank  before  he  can  draw  the 
money ;  he  can  negotiate  it,  however,  by  endorsing  it.  If  made 


58  BOOKKEEPING   SIMPLIFIED. 

payable  to  Bearer,  Currency,  or  Cash,  anybody  presenting  it 
would  receive  the  money  thereon.  If  such  a  check  be  lost, 
therefore,  the  payment  can  be  stopped  by  reporting  the  facts  to 
the  paying  teller  at  Bank,  provided  you  make  the  discovery  in 
time  to  get  to  the  Bank  before  the  check  has  been  presented  and 
paid. 

When  a  check  is  certified,  it  is  charged  to  account  of  the  party 
who  draws  it,  and  the  amount  held  by  the  Bank  until  the  certified 
check  is  presented. 

If  the  party  decide  not  to  use  the  check  after  having  it  certi- 
fied, the  amount  will  be  restored  to  their  credit  in  the  form  of  a 
deposit,  the  certified  check  being  returned  to  the  Bank  for  can- 
cellation. 

The  Bank  Book  described  below  is  an  exact  counterpart  of 
Check  Book,  the  latter  being  our  version  and  the  former  Bank's 
statement  of  the  same  facts. 


BANK  BOOK. 

This  is  a  small  pass-book  handed  in  to  the  receiving  teller  at 
the  Bank  with  each  deposit,  and  returned  to  us  by  him  after  he 
enters  therein  the  date  and  amount  of  deposit,  also  his  initial, 
thereby  constituting  our  receipt  against  the  Bank  for  that  amount 
of  money.  This  book  should  be  left  with  the  Bank  on  the  last 
day  of  each  month  to  be  balanced,  when  returned  to  us,  we  make 
a  recapitulation  in  red  ink  on  stub  of  our  Check  Book,  accounting 
for  the  difference  that  always  exists  between  our  balance  as  indi- 
cated on  stub  of  Check  Book  and  the  Bank  balance  as  per  pass- 
book ;  the  latter,  as  a  rule,  always  being  the  greater,  inasmuch  as 
we  have  likely  drawn  and  deducted  from  our  balance  many 
checks  that  have  never  been  presented  at  the  bank,  and  therefore 
not  paid  and  charged  to  our  account.  If  the  amount  of  checks 
thus  shown  to  be  outstanding  will  not  equal  the  difference  be- 
tween our  account  and  Bank  account,  the  difference  must  be  fer- 
reted out  and  the  two  accounts  made  to  agree. 

The  first  step  in  that  direction  is  to  arrange  in  numerical  order 


A   COMMON-SENSE   VIEW    OF   BOOKKEEPING.  59 

tke  vouchers  (checks  paid  and  cancelled)  returned  to  us.  When 
there  is  one  missing  we  refer  to  the  number  on  stub  of  Check 
Book  corresponding  to  the  missing  number,  and  if  not  marked" 
void,  we  make  a  memorandum  on  a  piece  of  paper,  which  will  be 
called  correction  sheet  for  reference  hereafter,  showing  the  number 
of  check  and  amount  opposite  ;  proceed  in  the  same  way  until  all 
the  vouchers  have  been  thus  gone  through,  which  will  show  all 
the  checks  outstanding  and  deducted  from  our  balance  up  to  the 
last  deposit  by  which  the  Bankers  gave  us  credit  before  reaching 
their  balance. 

2.  Then  go  over  the  vouchers  again,  comparing  the  amount  of 
each  with  the  amount  on  Check  Book  according  to  number,  check- 
ing the  latter  amount  with  colored  pencil  (blue  or  red)  until  all 
the  vouchers  have  been  thus  examined ;  any  discrepancy  arising 
between    the   vouchers  and    stub  will  be  noted   (added  or  sub- 
tracted) on  correction  sheet. 

3.  Go  through  the  vouchers  again,  and  check  on  Pass  Book 
any  amount  corresponding  with  amount  on  each  voucher  until  all 
the  vouchers  are  exhausted  a  second  time ;  then  look  carefully 
through  Pass  Book  to  see  if  any  amount  remains  unchecked  :  if  so, 
all  such  amounts  are  noted  on  correction  sheet. 

4.  Compare  entries  of  deposit  on  left-hand  side  of  Pass  Book 
to  our  entry  of  the  same  deposit  on  stub  of  Check  Book :  any  dif- 
ference arising  between  the  two  amounts  will  also  be  noted  on 
correction  sheet. 

5.  Examine  each  operation  of  addition  and  subtraction  on  stub 
of  Check   Book,  noting  on  correction  sheet  any  errors  discov- 
ered by  this  examination.     The  result  of  net  difference  on  correc- 
tion sheet  added  to  our  balance  will  agree  with  the  Bank  balance. 
Our  Recapitulation  on  Check  Book  will  consist  of  checks  out- 
standing, and  all  errors  discovered  according  to  correction  sheet, 
which  will  be  added  to  or  deducted  from  our  last  balance  as  the 
case  may  be  and  entered  on  Cash  Book  so  as  not  to  interfere  with 
balancing   the  cash  or  the  next  balance  of  the   Bank  account, 
at  which  time  many  of  the  checks  shown  to  be  outstanding  by 
recapitulation  will  come  in  with  next  vouchers ;  those  still  out- 
standing will  appear  in  the  next  recapitulation. 

6.  If,  in  the  first  place,  our  difference  should  be  $50,  $100, 


60  BOOKKEEPING   SIMPLIFIED. 

or  any  even  amount  that  has  occurred  frequently  during  the 
month,  we  might  locate  the  error  without  checking  in  the  manner 
indicated,  by  counting  the  number  of  such  items  charged  on  Pass 
Book;  also  the  number  of  vouchers  of  equal  amounts:  if  more 
items  of  any  amount  are  found  on  Pass  Book  than  we  have  vouch, 
ers  for,  it  will  probably  locate  the  difference  at  once.  We  require 
a  voucher  for  the  missing  item,  or  for  any  item  not  checked 
according  to  3d  rule.  If,  however,  we  find  a  voucher  for  every 
item,  we  then  count  the  same  kind  of  items  on  stub  of  Check 
Book  ;  and  if  there  are  more  items  found  on  Check  Book  than  are 
found  on  Pass  Book  we  will  also  find  the  excess  of  items  not 
checked  with  colored  pencil  on  stub  of  Check  Book — which  would 
be  another  way  of  readily  locating  our  difference. 


RECEIPT   BOOK. 

It  is  customary  to  take  a  receipt  in  this  book  for  all  payments ; 
it  is  only  necessary,  however,  to  require  a  receipt  for  payments 
made  in  currency,  or  by  checks  payable  to  bearer,  as  all  checks  to 
order  of  those  we  desire  to  pay  must  be  indorsed  by  the  party 
before  negotiating  them,  and  when  thus  indorsed  and  paid  by  our 
Bank  they  are  returned  to  us  as  vouchers,  constituting  the  party's 
receipt  for  the  money  also. 


BILLS   PAYABLE   BOOK. 

This  is  an  important  auxiliary  or  extra  memorandum,  peculiarly 
ruled  to  show  certain  facts  connected  with  notes  we  have  given, 
such  as  Date  of  note.  In  whose  favor,  Where  payable,  Time 
to  run,  When  due,  Amounts,  and  Remarks ;  any  other  facts, 
such  as  Number  of  note  and  For  what  account,  usually  found 
on  ready-made  books,  being  superfluous,  as  we  never  have  occasion 
to  refer  to  the  number  of  a  note  or  for  what  account  it  was  given. 

After  giving  out  our  note  we  charge  the  proper  account  through 
the  Journal,  then  enter  it  in  Bills  Payable  Book,  according  to  the 
facts  indicated  bv  the  headings  of  the  several  columns. 


A   COMMON-SENSE  VIEW   OF  BOOKKEEPING.  61 

The  difference  between  the  debit  and  credit  side  of  Bills  Paya- 
ble account  in  the  Ledger  must  agree  with  the  total  amount  o^all 
items  on  Bills  Payable  Book  against  which  there  are  no  remarks. 


BILLS   RECEIVABLE  BOOK. 

This  Is  also  an  important  auxiliary,  kept  according  to  no  par- 
ticular system,  nor  having  any  connection  with  any  other  book, 
being  designed  to  show  Date  of  note,  By  whom  drawn,  Where 
payable,  Time  to  run,  When  due,  Amounts  and  Remarks  j  differ- 
ing from  Bills  Payable  only  in  having  By  whom  drawn  substi- 
tuted for  In  whose  favor :  the  same  superfluous  columns  are  com- 
mon to  both  books.  Upon  receipt  of  another  party's  note  we 
pass  it  to  their  credit  through  the  Journal,  then  enter  it  in  Bills 
Receivable  Book  according  to  the  headings  of  the  several  col- 
umns, and  whenever  negotiated  or  paid  we  make  a  note  of  it  in 
the  Remark  column.  The  difference  between  the  debit  and 
credit  side  of  Bills  Receivable  account  in  the  Ledger  must  agree 
with  the  total  of  all  items  against  which  there  are  no  remarks  on 
the  Bills  Receivable  Book. 


ACCOUNTS   RECEIVABLE   BOOK. 

This  very  simple  but  highly  important  book  in  every  business 
seems  to  have  been  wholly  unknown  to  all  other  writers  on  the 
subject,  many  of  whom  evidently  never  had  any  business  experi- 
ence in  keeping  books,  but  who  write  altogether  from  a  theoreti- 
cal standpoint,  rehashing  what  they  have  read  about  bookkeeping 
with  slight  change  and  variation. 

Nowhere  throughout  the  copious  pages  that  have  been  written 
on  the  science  of  Double  Entry  bookkeeping,  which  have  passed 
under  the  writer's  observation,  has  any  reference  ever  been  made 
to  a  Book  of  Accounts  Receivable. 

Next  to  Bills  Receivable  and  Bills  Payable,  this  is  the  most 
important  auxiliary. 

The  financier  or  managing  partner  of  every  business  has  more 


62  BOOKKEEPING   SIMPLIFIED. 

frequent  recourse  to  this  book  than  to  any  other.  It  enables  him 
to  anticipate  his  dues  with  mathematical  precision  for  every  day 
during  the  month,  or  for  every  indebtedness  that  has  been  con- 
tracted. He  can  see  at  a  glance  what  accounts  are  also  past  due 
and  how  far  past  due,  and  to  a  certain  extent  govern  his  credits 
thereby ;  that  is  to  say,  any  customer  who  has  not  paid  promptly 
will  not  be  entitled  to  the  same  line  of  credit  without  a  satisfac- 
tory explanation  or  settlement  of  past-due  bills. 

The  Accounts  Receivable  Book  is  of  diary  form,  half  a  page  or 
more  being  set  apart  for  each  day,  the  entries  therein  being  made 
under  date  of  maturity  and  copied  from  the  Sales  Book  daily. 

When  a  settlement  has  been  made  and  entered  in  the  proper 
book  it  is  marked  off  this  book  by  drawing  a  red  line  through  the 
amount,  or  by  writing  opposite  the  amount  paid,  giving  date  of 
payment.  See  miniature  Accounts  Receivable  Book,  page  130. 


INVOICE   BOOK. 

Formerly  this  book,  in  form  and  ruling  like  the  Sales  Book, 
was  regarded  as  a  book  of  original  entry,  into  which  was  copied 
all  invoices  of  goods  bought ;  latterly  it  has  degenerated  into  a 
large-size  scrap-book  of  manilla  paper,  without  ruling,  into  which 
is  pasted  the  original  invoice  serving  the  same  purpose  and  obviat- 
ing all  possibility  of  erring  in  an  unnecessary  transfer. 

In  fact,  the  Invoice  Book  is  more  cumbersome  than  useful,  and 
should  be  thrown  aside  as  rubbish,  except  in  a  large  business  where 
goods  are  bought  from  many  firms,  in  which  case  it  might  be 
regarded  as  a  convenient  method  of  filing  invoices  for  ready  refer- 
ence if  supplied  with  an  index. 

If  we  buy  goods  from  but  few  houses  we  pass  their  invoices  to 
their  credit  through  the  Journal,  then  fold  them  in  uniform  size, 
and  write  across  one  end  the  name,  date,  and  amount  of  each, 
which  is  called  "filing,"  then  put  them  away  in  a  pigeon-hole  in 
the  desk  or  cabinet  made  for  that  purpose :  they  are  then  said  to 
be  "  on  file"  or  "  pigeon-holed." 

If  deemed  necessary  and  expedient  to  use  the  Invoice  Book, 
treat  it  as  the  counterpart  of  the  Sales  Book,  posting  the  amount 
of  each  bill  on  the  credit  side  of  the  account,  and  the  final  footing 
on  the  debit  side  of  the  Mdse.  account. 


A   COMMON   SENSE  VIEW    OF   BOOKKEEPING.  63 

THE   SIMPLE   VERSUS   THE   INTRICATE. 

The  object  of  debiting  and  crediting  accounts  is  the  same  now  as 
it  was  with  the  origin  of  double  entry,  but  the  manner  of  doing  it  is 
different,  and  the  reason  assigned  for  so  doing  is  as  much  more  lucid 
now  than  the  old  fogy  ism  of  half  a  century  ago  as  the  brightness  of 
the  noonday  sun  is  more  resplendent  than  the  mild  effulgence  of 
lunar  light. 

The  burden  of  the  legendary  song  then  was  "  Journalize  every- 
thing," a  rule  more  honored  in  the  breach  than  the  observance. 
This  old  humdrum  tune  is  fast  dying  out,  however,  and  will  soon  be 
as  echoless  as  footfalls  upon  the  boundaries  of  another  world. 

This  book  sounds  the  key-note  to  a  new  school-lullaby,  as  it  were, 
Journalize  nothing,  sweet  cadence  of  a  new  anthem  resonant  with 
common  sense. 

After  learning  our  classification  of  accounts  on  page  28,  the  sim- 
plicity of  our  eight  short  rules  on  page  29  must  be  apparent  to  all 
when  compared  with  the  following  unique  but  intricate  rules  copied 
from  a  stray  leaf  from  an  old  work  on  bookkeeping,  which  we  give 
verbatim  et  exem.plum,  and  which  are  better  calculated  to  confuse 
and  bewilder  than  they  are  to  enlighten  and  make  easy: 

When  property  of  any  description 

enters  ||  goes  out 
it  is  first  carried  to  the 

Debit  ||  Credit 

of  the  account  which  represents  it.     If  the  person  who 
gives  value  ||  receives  value 

has  not 
received,   ||  given, 

or  is  not  to 
receive  ||  give 
hereafter,  an  equivalent  for  it,  this  person  cannot  be 

credited  ||  debited 
since  he  does  not  remain  a 

creditor;   ||  debtor; 
but  in  double  entry  it  is  necessary  to  oppose  to  the 

debtor  ||  creditor 
item  in  every  account,  a 
creditor;   ||  debtor; 
we  therefore  substitute  a  nominal  or  impersonal 

creditor,   ||  debtor, 

which  takes  the  title  most  proper  to  point  out 
the  nature  and  origin  of  the  transaction. 


64 


Dr. 


BOOKKEEPING   SIMPLIFIED. 

CASH. 


Folio. 


Discount.     Mdse.        Sunds.       Ami. 


1885. 

Jan 

1 

1 

To  P.  A.  Wright.  .. 

Amount  invested 

$1  000 

00 

1 

"  T  P.  Noble     . 

1000 

00 

$2000 

00 

-"" 

2,000 

~00~ 

2 

To  Balance 

1,718 

75 

*•  Mdse 

Retail  sales 

$25 

00 

3 

6 

"  Miller  Bros  
"  Mdse 

Bill  Jan.  1,  $134.85 
Retail  sales  

$8 

09 

37 

50 

126 

76 

126 
62 

76 
50 

1,908 

~oT 

5 

R 

To  Balance 

1,399 

26 

"  Bills  receivable. 

Discounted  at  1st 

National  Bank, 

@  6*,  the  fol- 

lowing    notes: 

J.  C.  B.  &  Co., 

$131.76;  W.C.B. 
&  Co.,  $195.85- 

$327.61.  Dis.  un- 

expired  time.  .  . 

4 

15 

323 

46 

323 

46 

"  Mdse  

Retail  sales  

42 

00 

42 

00 

1,764 

72 

6 

To  Balance 

1,267 

87 

44  Mdse 

Retail  sales  ...   . 

45 

00 

7 

8 

"  Bills  payable... 

Discounted  at  1st 
National  Bank, 

our  note  of  this 

date  at  45  days, 
$500,  at  6#  

8 

75 

496 

95 

496 

95 

»  Mdse 

Retail  sales  

47 

50 

92 

50 

1 

8 

1.856 

62 

To  Balance 

808 

17 

14  Mdse  

Retail  sales... 

37 

50 

37 

50 

9 

R 

"JO  Brown  &Co 

Bill  this  date 

13 

00 

13 

00 

Amounts  carrie 

i  forward  

47 

15 

99 

234 

50 

2.959 

858 

67 

A   COMMON-SENSE  VIEW    OF   BOOKKEEPING. 


65 


CASH. 


Folio, 


Discount.  Expense.     Sunds. 


Or. 

Amt. 


1885. 
Jan. 

1 

2 
3 

5 

6 

7 

8 

2 

By  office  furniture. 
"  Expense       .... 

Safe,  $15ty  desk, 
$37.50;    chairs, 
$12;  clock,  $13; 
letter   -   press, 
$7.50;  stove  and 
fixtures,  $25... 
One  set  of  books. 
Letter-heads  

w 

7 
3 

00 
50 
50 

25 

$245 

00 

$245 

36 
1,718 

00 

25 

75 

"  Balance  

Bill-heads  

Pens,  $1.50;  Ink, 
$1.25;    pencils, 
50c 

Bank,  $1,500; 
drawer,  $218.75. 

500 

00 

2,000 

00 

4 

By  E.  H.  E.  Wright 
&  Co  

On  a/c  ck 

500 

8 
1,399 

00 

75 
9lfi 

"  Expense. 

Ton  of  coal 

5 
3 

25 

50 
00 

"  Balance  

Labor      housing 
coal  

Postage 

Bank,  $1,000;  ck., 
$126.76;    draw- 
er, $272.50  

$30 

00 

"i 

'66' 
25 

470 
25 

00 
00 

1,908 

01 

5 
10 

ByEarlington&Co 
"  Expense  

"  J.  Edw.  Forth.. 
"  Expense  

"  Balance  

Bill,  Jan.  1,  $500. 
Postal  Cards  
Telegram  .   . 

495 
1 
1,267 

00 

85 

87 
72 

On  a/c 

Car  fare  

Expressage 

.... 

20 
40 

Bank,     $980.22; 
drawer,  $287.65. 

00 
00 

'66' 

00 

00 

00 

75 
50 

10 

1,000 

'  '  12 
20 

1,764 

10 
4 

1 

'1 

By  Expense  

"  J.Virgil  Wright. 
"  E.  H.  E.  Wright 
&Co  

Expressage,  pp.  . 

6 
1,042 

808 

45 

00 
17 

Telegram  to  Chi- 
caero 

On  a/c  

Ck.  on  a/c,  $500; 
Thos.  Jackson, 
$300;  K.C.Wil- 
son, $200  

"  Expense  

"  P.A.Wright.... 
"  T.  P.  Noble  
"  Balance  

Car  fare 

4 

20 
50 
50 

Freight  fromCin. 
Scrubbing  ...... 

J  C    bill  on  file 

To  self  

Bank,     $476.47; 
drawer.  $331.70. 

50' 
25 

100 
2,382 

1,856 

62 

3 

ByMdse  

"  Expense 

J.  K.  P.,  bill  on 

file 

100 

00 
75 

1  doz  pencils 

Amounts  carrie 

Mucilage  

d  forward  

30 

00 

54 

05 

100 

75 

€6 


Dr. 


BOOKKEEPING   SIMPLIFIED. 

CASH. 


Folio. 


Discount.     Mdse.        Sunds.       Amis. 


1885. 
Jan. 

9 

10 

31 
1/31 

To  Amts.  brought 
««  Mdse    

forward  

$15 

99 

$234 
42 

50 
50 

$2,959 

47 

$858 
42 

67 
50 

Retail  sales  

^ 

901 

17 

6 

r 

499 

100 
63 

22 

40 
25 

"  Miller  Bros  

"  W.  C.  Browning 
&Co  

Bill,  5th  inst., 
$76.80;  less  ex- 
change 25c  .  . 

76 
23 

55 

85 

Bill,  5th  inst.,  $24; 
less  exchange, 
l.'c 

"  Mdse  

Retail  sales  

63 

25 

662 

87 

7 
11 
11 

To  Balance 

578 

88 
45 

87 

66 
00 

~53~ 

"  Davis  &  Co  

"  Wm.  French..  .  . 
"  James  Elston.. 
"  Mdse 

Bill,     5th     inst., 
$57.90  
Bill  30th  inst 

2 

89 

55 
18 
15 

01 
25 
40 

25 

"  30th  " 

Retail  sales 

45 

00 
25 

385 

712 

9 
3 
2 

Disct.  Dr.  to  Sunds. 
Cash       "     Mdse  . 
Cash       "     Sunds. 

Total  cash  disct.. 
"  retail  sales. 
"  receipts 

18 

88 

3,533 

sTsli" 

78 

^8~ 

385 

3,533 

78 

A  COMMON-SENSE  VIEW   OF  BOOKKEEPING. 


67 


Folio. 


CASH.  Cr. 

Discount.  Expense.     Sunds.       Amis. 


1885. 
Jan. 

9 
10 
31 

1/31 

4 

By  Amounts  broug 

"  E.  H.  E.  Wright 
&Co  

ht  forward  
On  a/c  

$30 

00 

$54 

05 

$2,382 
300 

00 
00 

$100 
300 

1 
499 

75 
00 

20 
22 

"  Expense  
"  Balance  

Blotters  

25 
75 
20 

1  qt  ink 

Car  fare 

Bank,    $476.47; 
drawer,  $22.75.. 

3 

1 

00 
50 

47 

23 

00 
50 

901 

17 

=^ 

50 

50 

87 

11 
11 

11 

10 
10 

9 
3 

2 

By  Johnson  &  Co.  . 
"  Lindsay  &  Co.. 
"  Expense  

"  Balance  

Bill,  2d  inst.  ;  $50. 
"        "        $25. 
Porter,  one  week 
Office    boy.    one 
week  .  . 

70 

13 

578 

10 
3 

00 
50 

Bank,     $576.87; 
drawer,  $2  

9 

10 

1 

00 

120 

15 
20 

90 

00 
00 

662 

87 

90 

00 

63 
53 

15 
63 

By  Martin  &  Brown 
"  Expense  

Bill,    29th    inst., 
$130;     less     1% 
prompt  cash.  .  . 
Ad.  for  boy,  in 
Herald   

155 

29 

527 

"  J.  Edw.  Forth.. 
"  J.Virgil  Wright 
"  Expense  

"  Balance  

On  a/c 

Porter,  one  week 
Office    boy,   one 
week 

10 
3 

9 
4 

00 

50 

75 

50 
25 

Expressage,    pp. 
Cartage    bill    on 
file           

Gas  bill 

Bank,     $455.97; 
drawer,  $71.66.. 

43 

97 

75 

97 

75 

712 

Sunds.  Dr.  to  Disc.. 
Expense  "     Cash. 

Sunds.      "     Cash. 
Balance  

Total  cash  dis..  . 
Total    cash    ex- 
pense 

60 

3,006 
527 

Total     disburse 
ments  

3,006 

15 

Carried  to  Feb.  2. 

3,533 

78 

68 


Dr. 


BOOKKEEPING   SIMPLIFIED. 

CASH. 


Folio. 


Discount.     Mdse.        Sunds.        Ami*. 


1885. 
Feb 

To  Balance  from 

Jan.  31  

$527 

fit 

8 

"  Bills  receivable. 
"  Mdse  

Discounted  at  1st 
National  Bank 
Davis   &   Co.'s 
note,  due  May 
16,    $376.20,    @, 
6&  103  days.... 
Retail  sales 

$6 

45 

37 

$369 

75 

3 

42 

00 

4 

14            it 

4(  44 

45 

00 

5 

tt             44 

41  44 

47 

50 

7 

6 

"  Miller  &  Bros. 
*'  Mdse  

Bill,   Jan.    29, 
$190.40  
Retail  sales  

11 

42 

35 

00 

178 

98 

548 
207 

00 

1,283 

36 

9 

To  Balance 

76 

91 

8 

"  Bills  payable... 

Discounted  at  1st 
National  Bank 
our  note,  30 
days,  $500,  @ 

2 

50 

497 

50 

"  Mdse 

Retail  sales 

45 

00 

"  Bills  receivable. 

Miller  Bros.  'note, 
due  13th,  de- 

77 

30 

14 

"  Mdse 

47 

50 

92 

50 

28 

6 

"  Miller  &  Bros  .  . 

Compromised  at 

50*  $78  80 

39 

40 

8 

"  Bills  receivable. 

Received  from 
W.  C.  B.  &  Co., 
to  be  applied 
in  payment  of 
their  note,  due 
May  4  ,  for 
$211  22 

100 

00 

714 

20 

^ 

882 

91 

1/28 

9 
p 

Disct.  Dr.  to  Sunds. 
Cash       "     Mdse 

Total  cash  Disct. 
"  retail  sales 

20 

37 

299 

50 

299 

50 

2 

,        44     Q      , 

1  562 

43 

1  562 

43 

Jan  31 

527 

63 

2.090 

06 

A   COMMON-SENSE  VIEW   OF  BOOKKEEPING. 


69 


Folio. 


CASH.  Or. 

Discount.  Expense.     Sunds.       Amts. 


1885. 
Feb. 

2 

3 
4 

5 
6 

7 

9 
14 

21 

28 

1/28 

3 

10 
8 

11 
10 

8 

By  Mdse  

J.  K.  P.,  bill  on 
file  

$50 

25 
500 

95 
15 

500 

00 

00 
00 

00 
00 

00 

$22 
1,185 

76 

15 
00 

21 

"  Expense  

"  J.  Ed  w.  Forth.. 
"  Expense  
"  Bills  payable... 

"  Expense  
"  J.  K.  Ross  

Dispatch  to  Cine. 
Car  fare  
On  a/c       

25 
15 

Expressage 

50 

Our  note  due  this 
day 

Freight  from 
Chicago 

$3 
3 

"'i' 

50 
00 

'66* 

25 

Postage  

'66' 

Bill,  Jan.  2,  $100.. 
Postal  cards 

$5 

"  J.  Virgil  Wright 
"  Expense  

"  Bills  payable... 
'  '  Balance   

Charity  

On  a/c 

Office    boy,   one 
week 

3 
10 

50 
00 

Porter  

Our  note  due  8th. 
Bank,    $4.70; 
drawer,  $71.51.. 

5 

3 

10 

13 

75 

50 
00 

50 

78 

200 
50 

180 

80 

00 
00 

00 

1,283 

36 

6 

8 

1 
8 

By  Expense  
"  Miller  &Bros.. 

"  Expense  

"  Bills  payable... 
"  Expense 

Coal,    $5.25,    la- 
bor 50c 

508 
46 

327 

80 
25 

86 

TT 

Note    due     13th, 
$77.30;  protest- 
ed— fees,  $1.50. 
Office    boy,    one 
week 

.... 

Porter,  one  week. 
Note  due  to-day.. 
Porter,  $10;  office 
boy,  $3.50..  ... 

:: 

"  P.  A.  Wright... 
"  Bills  payable... 

"  Expense  
"  Balance  

Paid  T.  C    D.  & 
Son  on  our  note 
due  May  5,  for 

$480 

Porter,  $10;  office 
boy,  $3.50  
Bank,     $122.20; 
drawer,  $105.66; 
check,  $100  

.... 

13 

50 

68 

lb~ 

68 

40 

882 

9 
3 
2 

Sunds.  Dr.  to  Dis.. 
Expense  "     Cash. 
Sunds.        '     Cash. 

Balance  carried 

Total  Cash  Disct. 
"        "Expense 
"      Dis- 
bursements.... 

5 

00 

1,762 
327 

20 

86 

^T 

1,762 

20 

to  March  2.  ..   . 

2,090 

1 

I 

70  BOOKKEEPING  SIMPLIFIED. 

CASH  ENTRIES  ELUCIDATED. 

DEBIT. 

January  1, 1885.  First  two  entries  show  the  amount  of  cash 
in  checks  invested  in  business  by  P.  A.  Wright  and  T.  P.  Noble, 
who  have  formed  a  copartnership,  under  the  firm-name  and  style 
of  P.  A.  Wright  &  Co.,  for  the  purpose  of  carrying  on  a  whole- 
sale and  retail  mercantile  business,  each  to  receive  one  half  the 
gains  or  sustain  one  half  the  losses,  according  to  copartnership 
agreement,  filed  with  the  private  papers  of  each  partner,  no  record 
of  which  is  made  on  the  books.  The  amounts  are  entered  first  in 
the  Sundries  column,  from  which  they  are  posted  at  the  partners' 
credit  in  the  Ledger. 

Upon  closing  the  cash  for  the  day  the  amount  of  receipts  are 
extended  into  the  outside  column  representing  the  daily  cash.  See 
remarks  on  Two  Cash  Books,  page  53. 

January  2.  The  balance  shows  amount  of  cash  on  hand  at  the 
beginning  of  the  second  day.  Next  entry  is  for  retail  sales  repre- 
senting the  total  amount  of  cash  received  during  the  day  from  all 
the  retail  salesmen,  according  to  memorandums  of  sale  turned  in 
by  each  whenever  a  sale  was  made,  and  kept  on  file  or  in  a  pigeon- 
hole until  the  close  of  the  day,  when  they  are  all  added  together 
and  entered  in  one  amount  to  the  credit  of  Merchandise  in  the 
Merchandise  column,  the  footing  of  which  at  the  end  of  the  month 
will  be  posted  on  the  credit  side  of  Merchandise  account  in  the 
Ledger. 

January  3.  Miller  Bros,  pay  by  check  their  bill  of  January  1, 
less  6  per  cent  discount.  The  net  amount  of  cash  is  extended 
into  the  Sundries  column  and  the  discount  in  the  special  column 
for  discounts,  both  amounts  being  posted  at  the  same  time  in 
separate  items  on  the  credit  side  of  the  customer's  account  in  the 
Ledger. 

Next  entry  is  for  retail  sales,  as  before  explained.  We  now 
close  the  Cash  Book  for  the  two  days,  not  having  sufficient  number 
of  entries  on  the  second  day  to  justify  the  operation.  We  add 
each  column  separately  and  extend  the  amount  into  the  outside 


A   COMMON-SENSE  VIEW   OF  BOOKKEEPING.  71 

column,  on  the  last  line  used  in  each  column.  As  there  is  but 
one  amount  in  the  Sundries  column  we  extend  it  alone. 

January  5.     The  balance  is  brought  down  as  usual. 

First  money  received  was  for  two  notes  discounted  at  our  Bank, 
the  net  amount  of  cash  and  discount  being  disposed  of  as  in  the 
case  of  Miller  Bros.,  and  a  memorandum  made  on  the  Check  Book 
charging  the  Bank  with  the  cash.  All  checks  received  from  any 
source  are  also  charged  to  the  Bank  daily  on  Check  Book  (page  118). 

Enter  retail  sales  and  close  as  before. 

January  6.     Enter  retail  sales. 

January  7.  "We  borrow  $500  from  our  Bank  on  our  note  for 
that  amount  for  45  days,  receiving  only  $196.25  in  cash,  the  dis- 
count being  $3.75. 

January  8.     Only  receipts  being  for  retail  sales. 

January  9.  J.  C.  Brown  &  Co.  give  check  on  the  spot  for  bill 
of  same  date  without  discount.  This  day's  transactions  being  re- 
corded on  part  of  two  pages,  we  extend  the  receipts  into  the  out- 
side column  on  first  page,  just  as  if  the  day's  cash  was  to  be  closed. 
"We  now  rule  across  all  the  columns  and  carry  the  footing  of  each 
forward  to  next  page  in  its  respective  column. 

January  10.  "We  have  received  returns  in  a  check  for  draft 
made  on  Miller  Bros,  for  net  bill  which  they  paid  in  full,  but  the 
Bank  through  which  we  drew  deducted  25c.  exchange  as  their  fee 
for  collecting  it. 

"W.  C.  Browning  &  Co.  paid  sight  draft  also,  and  the  Bank  de- 
ducted 15c.  exchange. 

The  two  items  of  exchange  are  charged  to  an  Exchange  account 
through  the  Journal,  from  which  they  are  posted  on  the  credit 
side  of  the  respective  accounts  on  which  they  occurred. 

January  31.  Davis  &  Co.  pay  in  currency  their  bill  of  5th 
inst.,  less  5  per  cent  discount.  William  French  and  James  Elstort 
also  pay  in  currency  their  bills  of  previous  day  net. 

"We  are  now  at  the  end  of  the  month  and  close  all  the  columns. 

Rule  a  single  red  line  across  Discount  column  only.  Cashiers 
as  a  unit  rule  across  all  the  columns  on  this  line  and  make 
all  their  additions  on  same  line ;  then  by  an  irregular  process 
recapitulate  the  footings  in  order  to  get  them  under  one  an- 
other. The  superiority  of  this  method  of  closing  the  Cash 


72  BOOKKEEPING   SIMPLIFIED. 

Book,  with  a  system  of  columns,  over  the  usual  way  will  be  appre- 
ciated when  seen,  and  adopted  without  argument. — 

Add  the  column,  and  explain  the  footing  in  form  of  Journal 
entry  on  the  left. 

On  the  next  line  we  rule  a  single  red  line  across  Merchandise 
column,  bring  down  the  total  footing,  and  extend  it  into  the  Sun- 
dries column;  it  then  becomes  an  item  of  Sundries,  and  is  posted  as 
we  have  before  stated.  On  the  next  line  we  rule  a  single  red  line 
across  Sundries  column,  the  footing  of  which  represents  CASH,  that 
is,  the  total  amount  of  money  received  during  the  month.  We 
extend  this  item  into  the  outside  column,  balance  and  close  it  for 
the  month  by  drawing  double  red  lines  across  the  entire  page  from 
Date  column. 

By  this  ingenious  and  scientific  way  of  dropping  one  line  for 
each  column  we  can  explain  each  footing,  which  explanation  will 
refer  to  all  the  figures  on  that  line,  and  give  the  book  a  business- 
like finish,  pretty  to  be  seen. 

CREDIT   SIDE. 

January  1.  On  entering  into  business  it  becomes  necessary 
to  lay  in  a  supply  of  furniture  for  the  office.  We  buy  for  cash 
such  articles  as  are  enumerated  in  first  entry  on  this  side  of  Cash 
Book,  and  charge  them  to  OFFICE  FURNITURE  account. 

We  then  buy  for  cash  a  set  of  books  and  necessary  articles  of 
desk  ware,  all  of  which  we  charge  to  expense  by  entering  the 
amounts  in  the  Expense  column.  See  remarks  on  Special  Columns, 
page  52.  We  kept  the  various  items  of  office  furniture  all  with- 
in the  space  for  descriptive  matter  until  we  arrived  at  the  total 
before  extending  it :  the  reason  for  this  is  we  have  to  post  every  item 
found  in  the  Sundries  column,  therefore  consolidate  as  many  items 
as  possible  into  one  amount. 

With  the  Expense  column  we  post  only  the  footing,  hence  we 
extend  each  line  of  items  separately.  Being  at  the  end  of  the  day, 
we  prove  the  cash,  close  in  red  ink,  and  balance  the  outside  column 
only,  leaving  the  main  columns  open  to  close  at  the  end  of  the 
month.  The  proof  of  the  cash  will  be  finding  enough  money  to 
equal  the  balance  between  the  debit  and  credit  side  by  counting 
the  money  in  the  drawer  and  adding  the  amount  to  the  balance  in 


A   COMMON-SENSE   VIEW   OF   BOOKKEEPING.  73 

bank  as  per  Check  Book,  making  a  memorandum  of  each  in  con- 
nection with  the  closing  entry  on  Cash  Book  to  show  at  a  glance 
just  what  shape  the  cash  is  in. 

January  2.  We  pay  E.  H.  E.  Wright  '&  Co.  $500  on  account 
by  check.  Buy  a  ton  of  coal  for  cash,  pay  for  housing  it,  buy 
postage,  and  charge  all  to  Expense.  Close  as  before,  always  mak- 
ing a  memorandum  showing  amount  in  Bank,  also  in  drawer. 

January  5.  We  pay  by  check  Earlington  &  Co.  their  bill  1st 
instant,  less  6  per  cent  discount.  Extending  net  amount  of  cash  into 
the  Sundries  column  and  the  amount  of  discount  in  its  special  col- 
umn, both  of  which  are  posted  in  separate  items,  but  in  one 
amount  on  the  debit  side  of  Earlington  &  Co.'s  account  in  the 
Ledger. 

Buy  postal-cards,  pay  car-fare  and  expressage,  all  of  which 
charge  to  expense. 

Give  J.  Edward  Forth,  salesman,  $25  on  a/c. 

January  6.  J.  Virgil  Wright,  bookkeeper,  takes  $10  on  a/c, 
and  charges  himself. 

Pay  and  charge  expense  items. 

January  7.  We  send  E.  H.  E.  Wright  &  Co.  check  for  $500  on 
a/c,  also  pay  by  check  for  their  a/c  T.  Jackson  $300,  K.  C.  Wilson 
$200.  Enter  each  item  separately  within  the  space  for  explanatory 
matter  and  extend  total  into  Sundries  column,  so  as  to  have  one 
item  to  post  instead  of  three  by  charging  each  separately. 

Pay  little  items  of  expense.  Hand  the  partners  whatever  they 
require,  charging  the  amount  to  their  respective  accounts. 

January  8.  Buy  job  lot  of  collars  from  J.  K.  Pyne  and  give 
him  currency  therefor,  as  we  have  no  account  with  him,  charge 
the  amount  to  Merchandise. 

January  9.  E.  H.  E.  Wright  &  Co.  having  drawn  on  us  at 
sight  for  $300,  we  give  check  to  the  party  presenting  draft  and 
charge  the  amount  to  a/c  E.  H.  E.  W.  &  Co. 

January  10.  Pay  Lindsay  &  Co.,  also  Johnson  &  Co.,  in  cur- 
rency the  amount  of  their  bills  of  3d  instant,  less  6  per  cent  dis- 
count. 

Pay  porter  and  office-boy  one  week's  wages  and  charge  to 
expense.  See  remarks  on  accounts  with  employees — J.  V. 
Wright  and  J.  Edward  Forth,  page  110. 


74  BOOKKEEPING  SIMPLIFIED. 

January  31.  Pay  by  check  Martin  &  Brown's  bill  29th  in- 
stant, less  7  per  cent  for  spot  cash. 

Advertise  for  boy,  pay  cartman's  bill  for  cartage  during  the 
month,  also  pay  monthly  gas-bill,  porter  and  office-boy  one  week's 
wages,  and  charge  all  to  Expense. 

Being  the  last  day  of  the  month  we  close  all  the  special  and  main 
columns,  on  the  same  principle  as  explained  in  connection  with, 
the  debit  side,  explaining  each  footing. 


SECOND  MONTH. 

DEBIT. 

February  2.  We  begin  on  new  page,  bringing  forward  balance- 
from  last  month,  entering  it  in  the  outside  column,  being  money 
on  hand  and  not  received  this  month,  and  the  main  columns  being 
designed  for  money  received  during  the  month  only. 

We  discount  at  our  bank  Davis  &  Co.'s  note,  $376.20.  Enter 
retail  sales  on  each  day  during  the  week.  Assume  that  Miller 
Bros,  pay  by  check  their  bill  29th  ultimo,  $190.40,  less  6  per 
cent. 

This  month  we  close  the  cash  weekly  instead  of  daily  to  avoid 
repetition  of  the  same  principle.  The  main  principle  to  be  ex- 
emplified is  the  second  monthly  closing. 

February  9.     Borrow  $500  from  our  Bank  on  our  note. 

Deposit  for  collection  Miller  Bros.'  note  due  on  the  13th.* 
Assuming  it  will  be  paid,  we  enter  it  as  cash  received,  and  charge 
the  bank  with  the  amount  on  Check  Book. 

February  28.  Assume  that  Miller  Bros,  fail,  and  pay  50# 
of  their  indebtedness. 

Assume  that  W.  C.  Browning  &  Co.  remit  $100,  to  be  applied 
toward  payment  of  their  note  due  May  4. 

Being  at  the  end  of  the  month,  we  close  the  several  columns 
same  as  last  month,  to  get  monthly  results,  extend  the  total  into 

*  The  amount  being  small,  we  will  collect  through  our  Bank  instead  of  for- 
eign Bank. 


A   COMMON-SENSE  VIEW   OF  BOOKKEEPING.  75 

outside  column  and  bring  down  the  balance,  in  red  ink,  that  was 
brought  from  January  31st,  which  added  to  the  total  receipts  will 
show  the  total  amount  of  cash  handled  during  the  month. 

CREDIT. 

February  2.  Buy  another  job  lot  of  collars  from  J.  K.  Pyne 
for  cash. 

February  3.     Hand  J.  Edward  Forth  $25  on  a/c. 

February  4.  Pay  note  due  to-day,  and  charge  the  amount  to  Bills 
Payable.  Deduct  from  Bank  account,  it  being  paid  by  our  Bank. 

February  6.  Pay  J.  K.  Ross's  bill  2d  ultimo,  less  5  per  cent 
discount. 

February  7.  J.  Yirgil  Wright  takes  $15,  and  charges  same 
to  his  a/c. 

(Pay  porter,  office-boy,  weekly ;  also  various  items  of  expense 
daily.) 

Pay  note  due  to-day,  deduct  the  amount  from  Bank  account  on 
Check  Book  and  charge  it  to  Bills  Payable. 

February  9.     Buy  coal,  etc. 

February  14.  Charge  Miller  &  Bros,  amount  of  their  note,  $77.- 
30,  previously  entered  as  cash,  with  additional  item  of  $1.50  for 
protest  fees,  as  it  was  returned  protested.  Deduct  $77.30  from 
Bank  account,  the  $1.50  being  paid  out  of  the  drawer  and  the  only 
actual  money  that  passed  hands. 

February  21.  Pay  note  due  to-day,  deduct  from  Bank  a/c,  and 
charge  Bills  Payable,  as  before.  Give  P.  A.  Wright  $50,  and 
charge  his  combined  capital  and  personal  accounts. 

February  28.  Remit  check  for  $180  to  T.  C.  Davis  &  Co.,  to 
be  applied  toward  payment  of  our  note  held  by  them,  due  May 
5,  for  $480. 

Being  at  the  end  of  the  month,  close  same  as  last  month. 


76  BOOKKEEPING   SIMPLIFIED. 


OFFICE  ROUTINE. 

Each  day's  work  begins  upon  opening  the  morning  mail. 
The  Manager  or  Proprietor  examines  his  correspondence, 
and  puts  the  machinery  in  motion  by  distributing  the 
work  among  the  clerks.  The  letters  containing  orders  are 
turned  over  to  the  Order-clerk,  who  copies  them  in  the 
Order-book,  numbering  each  with  a  colored  pencil, — which 
should  always  be  kept  on  every  clerk's  desk, — then  files  them 
away  temporarily,  for  convenient  reference.  The  Order-book  is 
then  turned  over  to  the  Stock-clerk,  who  selects  from  the  goods 
in  Stock  those  called  for,  and  has  them  carried  to  the  Entry  or 
Packing-room,  where  they  are  charged  up  on  the  Sales-book,  then 
packed  in  cases  for  shipment.  The  bills  are  then  made  from 
the  entry  on  Sales-book,  after  which  it  is  returned  to  the  Book- 
keeper's desk. 

The  letters  containing  remittances  of  cash  or  checks,  are 
turned  over  to  the  Book-keeper,  who  compares  the  amount  of 
remittances  to  his  Ledger  accounts;  and,  if  correct,  he  so  en- 
dorses them,  and  passes  them  to  the  Cashier,  who  en- 
ters them  in  the  C.  B.,  then  files  them  temporarily  for  reference. 
All  papers  are  filed  permanently  at  the  end  of  the  month,  by 
the  office  boy.  The  Cash-book  is  also  returned  to  the  Book- 
keeper's desk. 

The  letters  containing  notes  or  complaints  are  attended  to 
by  the  Book-keeper,  who  also  attends  to  that  part  of  the  corre- 
spondence relating  to  settlements,  sends  receipts  for  all  re- 
mittances, and  statements  explaining  any  discrepancy  that  may 
arise,  wherein  his  account  does  not  agree  with  that  of  the  cus- 
tomer. 

The  Proprietor  or  Manager  attends  to  the  general  corre- 
spondence relating  to  orders,  new  contracts,  opening  accounts 
with  new  customers,  looking  up  their  reference,  investigating 
their  financial  rating,  directing  travelling  salesmen  in  their 
routes,  and  seeing  that  they  are  kept  supplied  with  proper  line 
of  samples,  etc.  See  OFFICE  ROUTINE  ILLUSTRATED,  on  pages  241 
and  242;  also  Chart  243  and  244. 


A   COMMON-SENSE  VIEW   OF   BOOKKEEPING.  77 


IT  is  not  the  peculiarities  in  the  arrangement  of  the  matter 
contained  in  this  book  that  designates  it  as  a  JOURNAL,  as  that 
is  the  name  of  any  blank-book  similarly  ruled.  The  Cash- 
book  is  also  a  Journal,  but  of  the  casli  transactions  only.  The 
Sales-book  is  a  journal  of  the  sales  only,  and  being  special  jour- 
nals they  are  called  by  the  name  indicative  of  the  special  purpose 
for  which  each  is  used.  The  book  we  call  JOURNAL,  being  used! 
as  a  general  record,  cannot  be  designated  by  any  special  name  ; 
hence  it  is  not  otherwise  named.  It  is  usually  ruled  with  two 
double  columns  on  the  right-hand  side  of  the  page,  one  being 
for  debit  amounts  and  the  other  for  credit  amounts,  both  of  which 
are  understood  to  be  Sundries  columns.  There  is  also  a  double 
column  on  the  left-hand  side  of  the  page  for  dates  (months  and 
days).  When  there  are  more  than  two  double  columns  used  for 
amounts  they  are  introduced  for  special  purposes,  as  will  be  indi- 
cated by  the  headings  of  each.  In  our  Journal  will  be  found  two 
special  columns,  Mdse.  Dr.,  and  E.  II.  E.  W.  &  Co.,  Cr.  The 
former  will  contain  all  items  of  Mdse.,  received  from  any  source. 
The  latter  will  contain  the  amount  of  each  bill  bought  of  E.  IL 
E.  Wright  &  Co.  only,  who  are  supposed  to  be  our  principal 
creditors  and  from  whom  we  would  receive  more  goods  than 
from  any  other  firm,  and  for  that  reason  we  give  them  a  special 
column.  The  various  amounts  found  in  the  special  columns  will 
not  be  posted  but  passed  and  checked  thus  (  \/ ),  showing  they 
were  passed  purposely  and  will  be  reconsidered  at  the  end  of  the 
month,  in  the  final  footing  of  each  column  which  will  be  posted. 
We  would  have  as  many  special  columns,  therefore,  as  we  have 
very  active  accounts,  and  if  we  have  more  such  accounts  than  the 
space  in  the  Journal  would  admit  of  special  columns  we  would 
give  the  most  active  the  special  columns  and  enter  the  others  in 
the  Sundries  column. 


78  BOOKKEEPING   SIMPLIFIED. 

The  limited  number  of  items  found  in  our  special  columns 
would  not  be  enough  to  justify  their  use,  but  they  serve  to  illus- 
trate the  idea  as  to  how  they  are  used  and  demonstrate  their  great 
advantage  in  a  large  business. 

Many  years  ago  we  met  with  a  four-column  journal,  in  a  large 
business,  the  peculiarity  of  which  was  that  the  debit  columns  were 
on  the  left  of  the  page  and  the  credit  columns  were  on  the  right, 
the  accounts  intervening.  It  seemed  to  be  an  ingenious  arrange- 
ment of  the  matter,  but  if  not  altogether  impracticable  it  was  de- 
cidedly awkward,  to  say  the  least,  in  closing  them  at  the  end  of 
the  month,  and  for  that  reason  we  discontinued  the  book  and  in- 
troduced a  Journal  properly  ruled  with  the  columns  all  on  the 
right. 

Several  years  afterwards  a  publication  on  bookkeeping  appeared 
in  which  the  pseudo-author  introduced  the  four-column  Journal 
of  the  kind  above  alluded  to, — that  is,  the  debits  on  the  left  and 
the  credits  on  the  right, — claiming  originality  of  the  idea,  when  in 
fact  it  had  been  conceived,  materialized,  and  abandoned  by  some- 
body else  many  years  before,  and  met  with  and  repudiated  by  us 
also  long  before  it  appeared  in  the  publication  alluded  to  in 
which  that  is  made  the  leading  feature. 

The  dates  of  entries  on  our  Journal  appear  in  the  middle  of  the 
page,  and  the  Ledger  folios  on  the  left,  in  the  column  originally 
designed  for  dates. 

Every  Journal  entry  explains  itself  ;  that  is,  after  each  appears  a 
recital  of  the  facts  as  they  occurred,  thereby  constituting  what  may 
be  termed  the  Day-book  entry.  It  would  be  impracticable  to 
post  from  that  arrangement  of  matter  ;  hence  it  must  be  resolved 
into  the  foregoing  form,  or  in  other  words  journalized.  In  busi- 
ness methods  of  book-keeping,  therefore,  the  Journal  entry  is  made 
first,  followed  by  the  day-book  entry,  combining  the  two  into 
one.  All  Journal  entries  could  be  made  according  to  our  FIRST 
FORM.  The  object  of  the  other  three  forms  is  to  combine  as 
many  items  as  possible  into  one,  and  thereby  save  posting.  The 
arrangement  of  blank  lines  in  our  FOURTH  FORM  would  admit  of 
four  different  combinations  like  the  FIRST  FORM,  which  would 
make  eight  amounts  to  be  posted  instead  of  four. 


A    COMMON-SENSE   VIEW   OF   BOOKKEEPING. 


79 


JOURNAL  FOR  JANUARY,   1885. 


Mdse.    Dr.  E.  H.  E.  W.  &  Co.  Cr. 


Dr.  Sunds.  Cr 


Mdse     Dr  To  Sunds 

$2,000 

00 

*> 

To  E.  H.  E.  Wright  &  Co  
"  Earlington  &  Co 

$1,000 

00 

$500 

00 

5 

"  Sandiford  &  Co  
As  per  bill  on  file, 
Which  carries  with  it  the  idea  that  the 
goods  have  been  purchased,  otherwise 
the  bills  would  not  be  filed,  but  thrown 
away. 

2. 

50C 

00 

8 
7 

'7 

Bills  Receivable.    Dr.  To  Sunds  
To  J.  C.  Brown  &  Co  
Received  their  note  dated  1st  inst., 
at  60  days,  in  settlement  of  bill 
same    date.    $137.25,  less    4%  dis- 
count, $5.49  =  $131.76. 
To  W.  C.  Browning  &  Co  
Received  their  note  dated  1st  inst.. 
at  90  days,  in  settlement  of   bill 
same  date,  $201  90,  less  3%  discount, 
$6.05  =  $195  85. 
We  have  made  a  separate  entry  for  the 
discount  (see  below),  although  *il  might 
have  been  incorporated  in  this  entry, 
which  would  have  made  it  "  Sundries 
Dr.  To  Sundries." 

i 

$327 

61 

131 
195 

76 

85 

^ 

7 

Discount.     Dr.  To  Sunds  
To  J  C  Brown  &  Co 

11 

54 

g 

40 

Allowed  them  4%  discount  on 
bill  Jany  1st               .             $137  25 

7 

To  W.  C.  Browning  &  Co.  ... 
Allowed  them  3$  discount  on 
billJany.  1st  $201  90 

6 

05 

2 

11 

Mdse.     Dr.  To  Sunds  
To  J.  K.  ROSS&  Co  
"  Johnson  &  Co  

675 

00 

100 
50 

00 
00 

"  T.  C.  Davis  &  Son. 

500 

00 

"  Lindsay  &  Co  

25 

00 

As  per  bills  of  this  date  on  file. 

8 
^ 

Sundries.    Dr.  To  Bills  Payable  
Sandiford  &  Co  

500 

00 

980 

00 

4 

Gave  them  our  note  at  30  days,  from 
1st  inst.,  to  balance  a/c. 
T.  C.  Davis  &  Son  
Gave  them  our  note  at  4  mos.  from 
2d  inst..  in  settlement  of  bill,  $500 
less  4fc  dis.  $20  =  $480. 

r 

480 

00 

4 

T.  C.  Davies&  Son.    Dr  

9 

To  Discount. 

20 

00 

Allowed  us  4%  dis.  on  bill  Jany.  2, 

$500  =  $20. 

20 

00 

9 

6 

Exchange.     Dr.  To  Sunds  
To  Miller  Bros 

40 

25 

7 

"  W.  C.  Browning  &  Co.  ... 
Allowed  them  exchange  on  collec- 
tions by  draft.    See  C.  B.,  folio  2. 

15 

Amounts  carried  forward  

$2.675 

00 

$1,000 

00 

$1,339 

55 

$3,014 

f>5 

80 


BOOKKEEPING   SIMPLIFIED. 


JOURNAL    FOR    JANUARY,   1885— Continued. 


Mdse.    Dr.  E.  H.  E.  W.  &  Co.  Or. 


Dr.    Sunds.  Cr. 


10 

Amounts  brought  forward  — 
Mdse     Dr 

$2,675 

R/V> 

00 

$1,000 

00 

$1,339 

55 

$3,014 

55- 

To  E.  H.  E.  Wright  &  Co  
As  per  bill  on  file. 

500 

00 

8 

Bills  Receivable.    Dr  
To  Miller  Bros 

77 

30 

77 

30. 

G 

Received  their  note  at  30  days  for 
net,  bill  of  this  date. 

23 

X. 

Sunds     Dr  To  Sunds                   ... 

Bills  Receivable    

657 

24 

Discount                                    

H 

71 

To  Davis  &  Co                      .  .  . 

376 

20 

0 

Received  their  note  at  4  mos.  from 
Jany.   15th;  average  date  of  bills 
Jany.  1st  and  19th,  in  settlement 
of  those  bills. 
To  J.  C.  Brown  &  Co  
Received  their  note  at  60  days  from 
Jany.  19th;  average  date  of  bills 
Jany.  9th  and  23d,  $292.75,  to  set- 
tle the  same,  less  4%  disc.  $11.71  = 
$281.04. 

In  posting   Davis  &  Co.'s  credit  we  say 
"  By  Sunds,"  which  would  indicate  they 
were  credited  by  two  accounts,  when,  in 
fact,  they  are  credited  by  "  Bills  Rec'd  " 
only.  It  is  necessary  to  say  "  By  Sunds." 
to  enable  us  to  retrace  the  matter  from 
the  Ledger  to  this  entry. 

oo 

292 

75 

4 

E.  H.  E.  Wright  &  Co.    Dr  
To  Bills  Receivable    

281 

04 

281 

04 

Transferred  to  them  on  a/c  J.   C. 
Brown  &  Co.'s  note  due  Mar.  23d. 
23 

Mdse     Dr  To  Sunds 

1  500 

00 

5 

To  E.  H.  E.  Wright  &  Co.  ... 
"  Sandiford  &  Co         

1,000 

00 

1          RAA 

00 

As  per  bills  of  this  date  on  file. 
20 

4 

8 

E.  H.  E.  Wright  &  Co.    Dr..  . 
To  Bills  Payable  
Their  draft  on  us  at  20  days1  sight, 
which  we  this  day  accepted  on  a/c. 

OA 

200 

00 

200 

00 

Mdse     Dr  to  Sunds             

225 

00 

j1 

To  W  F  Saxe  &  Co       .  . 

95 

00 

tl 

'  '    Martin  &  Brown  

130 

00 

As  per  bills  on  file  this  date. 

Amounts  carried  forward  .  .  . 

$4,900 

00 

$2,500 

00  ! 

$2,566 

00 

$4,966 

84 

A   COMMON-SENSE  VIEW    OF   BOOKKEEPING. 

JOURNAL   FOR   JANUARY, 


81 


Mdse.    Dr.  E.  H.  E.  W.  &  Co.  Cr. 


Dr.  Sunds.  Cr. 


Amount  brought  forward   ..  .  j 

$4,900 

00 

$2,500 

00 

$2,5G6 

8*1 

$4,966 

84 

5 

Mdse.     Dr  To  Sunds            
ToE  H.  E.  Wright  &  Co.... 
••   Earlingion  &  Co...    . 
Jany.  23d  $400 
25th  200 

1,750 

00 

1,000 

00 

750 

00 

"      30th  150 

$750 
Goods  purchased  on  a/c  as  per  bills 
on  file. 
The  three  bills  from  I  arlington  &  Co.  are 
all  supposed  to  have  come  lo  our  atten- 
tion at   i  he  same  time  ;   the  date  and 
amount  of    each    must  appear  in   the 
Journal  entry,  but  only  the  total  in  the 
Ledger. 

Ol 

7 
g 

Sunds.  Dr.  To  W.  C.  Browning  &  Co. 
Bills  Receivable 

211 

22 

217 

75 

i) 

Discount                         

6 

53 

Our  draft  on  them  at  90  days1 
sight,  which  they  this  day 
accepted  in  payment  of  bill 
28th  inst  $217  75 
Less  '&%  discount                     .  .       6  53 

31 

3 

10 
10 

Expense.    Dr.  To  Sundries..  
To  J  .  Edward  Forth  
"  J.  Virgil  Wright  

400 

00 

125 

•jot 

00 

no 

10 

For  services  in  Jany.  as  per  agree- 
ment. 
To  A.  J.  Sheldon  
Rent  of  store  in  Jany.  as  per  lease.. 

150 

00 

Mdse.  Dr.  To  Sunds.  (total  purch's). 
E.   H.  E.   W.  &  Co.,  Cr.  by  Mdse. 
(total  amount  bought  of  them).. 

$6,650 

00 

$3,500 

~00~ 

6,650 

00 

$3,500 

00 

1  $9,834 

59 

$9,834 

59i 

JOURNAL   FOR   FEBRUARY,  1885. 


Mdse. 


Dr     

To  Bills  Payable i 

Our  note  at  30  days,  in  favor  of  J.  K.  Pane,  to  settle  his  bill  on 
file 


14 


Miller&Bros.    Dr 

To  Interest j 

6#  interest  for  30  days  on  renewal  of  their  note  protested  for 

non-payment,  $77.30;  including  protest  fees,  $1.50 

-14 


Bills  Receivable.  Dr  

To  Miller  &  Bros 

Received  their  note  this  date  at  30  days,  in  renewal  of  note  pro- 
tested, $77.30,  including  protest  fees,  $1  50,  and  30  days  in- 
terest @,  6$  =  .40,  for  time  new  note  has  to  run 


$250 


79 


00 


40 


$250 


79 


00> 


40 


BOOKKEEPING  SIMPLIFIED. 


JOURNAL   FOR  FEBRUARY, 


—  Continued. 


« 

Bills  Payable      Dr                                  

1 

9H 

3 

To  Interest     .  .     .         

1 

98 

6$  interest  on  $180  (ain't  paid  on  our  note  due 
May  5th,  for  $480)  for  66  days  unexpired  time. 

no 

6 

Miller  &  Bros      Dr  

79 

SO 

& 

To  Bills  Receivable                      

79 

20 

Returned  to  them  their  note  due  March  19th, 
$79.20,  the  ain't  having  been  included  in  their 
settlement  at  40  cents  on  the  dollar. 

OQ 

% 

Interest      Dr                                    

2 

81 

To  E   H  E    Wright  &  Co 

2 

81 

Allowed  them  6$  int.  for  unexpired  time,  60  days, 
on  J.  C.  Brown   &   Co.'s  note,  $281.04,  due 
Mar.  24,  which  we  transferred  to  them  on  a/c, 
Jany.  23. 

OQ 

>o 

1 

08 

O 

To  Bills  Receivable 

1 

08 

0 

Allowed  W.  C.  Browning  Qf0  on  $100  paid  by 
them  on  their  note  due  May  4,  for  $211.22,  65 
days  before  maturity. 

00 

tfl 

$39 

80 

6 

To  Miller  &  Bros 

$39 

80 

50$  of    their  account,    $79.20,   lost  by  their 
failure. 
°8 

•q 

Mdse      Dr          

26 

00 

To  Davis  &  Co                   

26 

00 

2  doz.  No.  4  Shirts  returned  by  them,  not  being 
equal  to  sample. 
28 

•fi 

Expense      Dr  To  Sunds    

400 

00 

~lft 

To  J   Edward  Forth                       ... 

125 

00 

10 

"  J  Virgil  Wright             

125 

00 

For  services  in  Febv    as  per  agreement 

1ft 

To  A  J  Sheldon                 

150 

00 

Rent  of  store  for  Feby    as  per  lease  

A  COMMON-SENSE  VIEW   OF  BOOKKEEPING.  83 


This  book  is  peculiar  to  the  mercantile  business  and  is  some- 
times called  the  Day-book  ;  it  is  by  no  means  the  kind  of  day- 
book used  in  our  so-called  business  colleges,  or  as  used  in  the 
old  style  of  bookkeeping  of  long  ago,  which  contained  a  history 
of  all  business  transactions,  and  which  necessitated  the  intermedi- 
ate book  called  JOURNAL,  into  which  the  matter  was  rearranged 
under  ledger  titles,  a  process  then  known  as  journalizing,  and 
which  is  still  the  usual  acceptation  of  the  meaning,  but  not  ours, 
as  will  appear  in  our  preface.  It  will  be  observed  that  the  Sales- 
book  is  the  principal  book  of  charges  against  our  customers. 
Any  other  kind  of  business  may  also  have  a  principal  book  of 
charges,  the  name  of  which  would  be  suggested  by  the  nature  of 
the  business,  or  possibly  be  called  THE  BLOTTER,  and  would  be 
managed  the  same  as  the  SALES-BOOK,  from  which  the  amount  of 
each  charge  is  posted  directly  into  the  Ledger  to  the  debit  side 
of  the  customer's  account,  and  the  totals  of  all  the  amounts  at  the 
end  of  the  month  posted  on  the  credit  side  of  whatever  account 
represented  the  business.  The  figures  on  the  left-hand  side  of 
the  page  in  our  Sales-book  indicate  the  Ledger  pages  to  which  the 
matter  has  been  transferred  and  are,  therefore,  our  post-mark  or 
the  evidence  that  we  have  posted.  If  there  is  a  great  deal  of 
posting  to  be  done,  and  we  are  not  familiar  with  the  exact  loca- 
tion of  the  account  on  the  Ledger,  we  first  place  opposite  each 
name  on  the  SALES-BOOK  the  Ledger-page,  which  is  ascertained 
from  the  Ledger-index  before  making  any  transfers ;  then,  after 
transfering  each  or  posting,  it  becomes  necessary  to  check  each 
account  thus  |/,  showing  it  has  been  posted  :  those  not  checked 
will,  of  course,  be  understood  as  still  to  be  posted,  and  indicate 
which  we  are  to  begin  with  upon  resuming  that  operation,  which 
for  any  reason  may  have  been  discontinued  before  finishing.  The 


84  BOOKKEEPING   SIMPLIFIED. 

figures  in  the  middle  of  the  page  dividing  the  line  that  is  drawn 
between  each  entry  are  the  dates  of  entry. 

The  customer's  name  and  the  terms  of  sale  alone  should  be 
written  on  the  first  line,  and  the  address  on  the  next  line,  begin- 
ning about  the  middle  of  the  page.  This  would  prevent  unneces- 
sary crowding  of  the  matter,  at  the  same  time  adding  to  the  neat- 
-rtess  of  the  manuscript. 

By  the  terms  is  meant  the  conditions  of  the  sale  in  relation  to 
time  of  payment  and  discount,  which  are  usually  stated  thus  :  6$  10 
days,  5$  30  days,  4$  60  days,  3^90  days,  or  4  mos.  net, — meaning 
that  the  customer  sold  on  5$  30  days  will  be  required  to  pay  the  bill 
at  the  expiration  of  the  30  days,  less  5^  of  the  amount,  which  would 
be  an  inducement  to  make  him  pay  promptly.  The  penalty  for  not 
paying  would  be  forfeiture  of  the  discount.  The  customer  sold 
on  4:%  60  days  has  the  advantage  in  time  over  the  30-days  cus- 
tomer, but  no  advantage  in  discount  being  allowed  only  4^,  but 
required  to  pay  in  the  time  specified — 60  days — he  can  pay  at  the 
expiration  of  30  days  if  he  prefers,  and  thereby  avail  himself  of  the 
30-day  discount  of  5% ;  and  so  on  with  the  other  customers.  Any 
customer  sold  on  4  mos.  net  would  have  great  advantage  in  time, 
but  would  be  entitled  to  no  discount  if  he  took  full  time.  The 
time- would  be  determined  by  the  customer's  financial  rating; 
the  more  capital  he  has,  the  longer  time  would  be  given  him,  and, 
as  a  rule,  the  quicker  he  would  pay,  availing  himself  of  the 
greatest  discount.  Any  one  paying  within  10  days  would  be  en- 
titled to  $%  discount.  If,  by  oversight  or  otherwise,  a  30-days 
customer's  account  is  permitted  to  run  60  days  he  would  be  en- 
titled to  4^  discount,  same  as  a  regular  60-days  customer,  forfeit- 
ing \%  for  each  30  days  until  4  mos.,  when  his  account  would  be- 
come net,  that  is,  subject  to  no  discount.  After  4  mos.,  any  ac- 
count would  begin  to  draw  interest  at  §%  per  annum  until  settled. 
A  few  days  past  maturity  would  make  no  difference  in  the 
discount  until  after  15  days,  when  one  half  of  one  per  cent  would 
be  forfeited.  With  a  good  customer,  however,  we  could  not  af- 
ford to  be  particular,  and  if  he  deducted  full  discount  20  days 
after  his  account  was  due  it  would  not  be  questioned  ;  in  fact,  any 
small  claim  made  by  a  good  customer  would  be  allowed  and 
credited  in  his  account,  rather  than  incur  the  risk  of  offending 


A    COMMON-SENSE   VIEW   OF   BOOKKEEPING.  85 

him,  and  thereby  losing  his  trade.  Such  matters  as  these  are  not 
left  to  the  bookkeeper,  but  would  be  adjusted  by  the  financier  &r 
managing  partner,  except  when,  in  the  bookkeeper's  judgment, 
they  seem  to  be  just,  in  which  case  they  are  not  brought  to  the 
attention  of  the  financier.  It  requires  sound  judgment,  there- 
fore, to  be  a  good  bookkeeper  and  know  how  to  deal  with  cus- 
tomers without  giving  offence. 

When  bills  are  dated  ahead  the  discount  is  reckoned  from  the 
future  date,  which  would  appear  in  connection  with  the  terms 
and  therefore  be  part  of  the  terms.  For  instance,  goods  delivered 
1st  with  the  bill  dated  30  days  ahead,  the  terms  would  be 
stated,  5$  30  days,  Aug.  1^,  which  would  mean  the  bill  would 
be  payable  Sept.  1st,  less  5$,  and  so  on  with  the  various  other 
terms  as  before  explained.  It  would  virtually  be  5$  off  at  the 
expiration  of  60  days  from  regular  date  of  bill,  or  the  date  the 
delivery  was  made.  The  object  of  dating  bills  ahead  is  to  induce 
buyers  to  place  their  order  for  goods  during  the  dull  season,  or 
before  their  regular  time  for  laying  in  their  supply  of  seasonable 
goods,  giving  them  the  advantage  of  time  between  the  two  dates 
in  which  to  dispose  of  their  wares. 


TRANSCRIPT. 

In  a  large  business  where  there  are  many  entry-clerks,  two  Sales- 
books  are  required  for  each,  which  are  used  on  alternate  days,  and 
which,  of  course,  would  necessitate  many  Sales-books.  It  would 
not  be  convenient  to  post  from  so  many  books  ;  therefore  a  Trans- 
script  of  the  dates,  names,  addresses,  terms,  and  amounts  are  made 
from  each  Sales-book  into  a  book  called  Transcript,  which  is  spec- 
ially ruled  with  columns  to  show  those  facts,  also  columns  for 
amount  of  sales  for  each  department,  and  from  which  the  sales 
are  posted.  The  object  of  having  two  Sales-books  for  each  entrv- 
clerk  is,  that  while  one  is  being  used  for  entering  goods  the  other, 
which  was  used  on  the  previous  day,  can  be  used  for  making  tke 
transcript.  ^ 


86 


BOOKKEEPING   SIMPLIFIED. 


THURSDAY,  JAN.  ist,  1885. 


6 

Miller  Bros.,                                           5#,  30  d. 
St.  Louis,  Mo. 
3  Doz.  No.  1  Shirts  ®  $10  00 

£30 

00 

3             "2      "    "     11  00 

33 

00 

2             "3       "    "     12  00 

24 

00 

1             "    4      "    

13 

00 

12          Collars  "       1  60 

19 

20 

4          Cuffs  "       3  60 

14 

40 

Case  and  cartage.  .  .  . 

1 

25 

$134 

85 

6 

J.  C.  Brown  &  Co.  .                                4&  60  d. 
Chicago,  111. 
2|  Doz.  No  1  Shirts  @  $10  00 

25 

00 

3              "     2      "    11  00 

33 

00 

2              "     3      "    1200 

24 

00 

1              "4      "      

13 

00 

$              "     5      "  •  1400 

7 

00 

10            Collars  160 

16 

00 

5      ,      Cuffs     .                                             3  60 

18 

00 

Case  and  cartage  

1 

25 

137 

25 

7 

W.  C.  Browning  &  Co.,                        3#,  90  d. 
Detroit. 
4  Doz.  No  1  Shirts     .  .                        ©  $10  00 

40 

00 

4            "2      "    '      11  00 

44 

00 

2            "     3      "    '      1200 

24 

00 

2            "    4      "    ....                        '1300 

26 

00 

2            "5       "    '      14  00 

28 

00 

15          Collars  '        160 

24 

00 

4          Cuffs  '        3  60 

14 

40 

Case  and  cartage  

1 

50 

201 

90 

7 

Davis  &  Co.,                                         4  m.  net. 
Cincinnati. 
31-  Doz.  No.  1  Shirts  @  $10  00 

35 

00 

3              "2      "    11  00 

33 

00 

2              "    3       "    1200 

24 

00 

2              "    4      "    ...                               1300 

26 

00 

2              "    5      "    1400 

28 

00 

12            Collars  1  60 

19 

?,0 

Case  and  cartage  

1 

25 

166 

45. 

7 

W.  C.  Browning  &  Co.,                      Net,  30  d. 
Detroit. 

24 

00 

24 

00 

7 

Davis  &  Co.,                                          4  m.  net. 
Cincinnati, 
3  Doz  No  6  Shirts     @  $14  50 

43 

50 

4     "     Cuffs  "       360 

14 

40 

57 

90 

Amount  carried  forward 

722 

35 

A   COMMON-SENSE  VIEW   OF  BOOKKEEPING.  8T7 

WEDNESDAY,  JAN.  7th,  1885. 


Amount  brought  forward  

$722 

35 

6 

Miller  Bros.,                                           5#,  30  d. 
St.  Louis. 
2  Doz.  No.  5  Shirts  @  $14  00 

$28 

00 

2     "      "     6      "    ....   "     1450 

29 

00 

5     "     Collars..  "       160 

8 

00 

3     "     Cuffs  "       3.60 

10 

HO 

Case  and  cartage  

Q 

1 

00 

76 

80> 

7 

Davis  &  Co.,                                       Net,  30  d. 
Cincinnati. 
1  Doz  Al  Shirts  to  order  

24 

00 

£     "                "            "       @  $26  00 

13 

00 

37 

00 

6 

J.  C.  Brown  &  Co.,                            Net,  30  d. 
Chicago. 
i  Doz.-  Shirts  to  order  @  $26  00 

13 

oo 

13 

00 

6 

J.  C.  Brown  &  Co.,                               4#,  60  d. 
Chicago. 
3  Doz  No  6  Shirts  @  $14  50 

43 

50 

2     "      "7      "                                     "     1500 

RO 

00 

4    "     Cuffs          "       350 

14 

00 

Case  and  cartage  
in 

75 

88 

2fr 

6 

Miller  Bros.,                                         Net,  30  d. 
St.  Louis. 
1  Doz  Al  Shirts  to  order  

24 

00 

1£  ««     A2      "            "       ©$2300 

34 

50 

^     ««               "            ««        "2600 

1Q 

00 

1     "     Collars       

I 

00 

1     ••     Cuffs  

3 

90 

77 

Ort., 

10 

7 

Davis  &  Co.  ,                                              4  mos. 
Cincinnati. 
5  Doz  No  1  Shirts     ...                   ©•  $10  00 

Kft 

no 

5     ««      "2      "    "     11  00 

KK 

00 

5     ««       "3      "    "     1200 

fiO 

00 

15     "     Collars  "       150 

22 

50 

6     "     Cuffs  "       350 

21 

00 

Case  and  cartage  

03 

1 

25 

209 

75.- 

6 

J.  C.  Brown  &  Co.,                               4%,  60  d. 
Chicago. 
6  Doz  No  1  Shirts  @  $10  00 

60 

00 

4     "       ««     2      "    "     11  00 

44 

00 

5     "       "     3      "    "     12  00 

60 

00 

3     "       ««    4      "    "     1300 

39 

00 

Case  and  cartage.  .  .  . 

1 

50 

204 

50 

Amount  carried  forward 

1  428 

Qtf 

38 


BOOKKEEPING   SIMPLIFIED. 


WEDNESDAY,  JAN.  28th,  1885. 


Amount  brought  forward  .  . 

$1  428 

95 

7 

W.  C.  Browning  &  Co.,                         3£,  90  d. 
Detroit. 
5Doz.  No   1  Shirts  ®  $10  00 

$50 

00 

5     "       "     3      "        ...                  "     1200 

60 

00 

4     "      "     5      "    "     14  00 

56 

00 

15     "     Collars  "       150 

22 

50 

8     "     Cuffs                          .                 "       3  50 

28 

00 

Case  and  cartage  

M 

1 

25 

217 

75 

'6 

Miller  Bros.,                                           5%,  30  d. 
St.  Louis. 
5  Doz  No  1  Shirts                               @  $10  00 

50 

00 

5     ««       "4      "    ««     13  00 

65 

00 

3     "      "6      "    "     14  50 

43 

50 

10     "     Collars  "       1.60 

16 

00 

4     '•     Cuffs  "       3.60 

14 

40 

Case  and  cartage.  .  .  . 

1 

50 

190 

40 

11 

Wm.  French,                                       Net,  30  d. 
City. 
|  Doz   Shirts   to  order  ®  $25  00 

12 

50 

1     "     Collars 

1 

75 

1     "     Cuffs            

4 

00 

18 

915 

6 

J.  C.  Brown  &  Co.,                                4g,  60  d. 
Chicago. 
5£  Doz  No  1  Shirts  ©$1000 

55 

00 

4      •'       "2      "                                 "     11  00 

44 

00 

4      "      "3      "      ....              .   "     12  00 

48 

00 

12      "     Collars  "       160 

19 

9,0 

6      "     Cuffs  "       3  60 

21 

60 

Case  and  cartage  

1 

50 

189 

30 

11 

Wm.  Ward,                                         Net,  30  d. 
Jersey  City. 
\  Doz   Shirts  to  order     .       .         .       @  $25  00 

12 

50 

1     "     Collars  

1 

75 

1     "     Cuffs  

3 

90 

18 

15 

11 

James  Elston,                                      Net,  30  d. 
Brooklyn. 
\  Doz  Shirts  to  order  @  $27  00 

13 

50 

1     "     Collars  

1 

90 

15 

40 

31 

•  11 

L.  Powell,                                            Net,  30  d. 
City. 

26 

00 

1     "     Collars  

1 

90 

1     "     Cuffs                    

3 

90 

31 

80 

Amount  carried  forward 

2  110 

00 

A   COMMON-SENSE  VIEW   OF  BOOKKEEPING. 


89 


SATURDAY,  JAN.  3ist,  1885. 


Amount  brought  forward 

$2  110 

00 

7 

W.  C.  Browning  &  Co.,                         3#,  90  d. 
Detroit. 
5  Doz  No  2  Shirts  ®  $11.00 

$55 

00 

5     "       "4      "                    \              "     1200 

60 

00 

5     «       "     6       "        "     13  00 

65 

00 

12     "     Collars     "       1.60 

19 

9,0 

4     "     Cuffs  "       3.60 

14 

40 

Case  and  cartage  

1 

50 

215 

10 

3 

Total  sales  in  Jan  

$2,325 

10 

MONDAY,  FEBRUARY  2d,  1885. 


7 

W.  C.  Browning  &  Co.,                              3/90. 
Detroit. 
4  Doz  No   1  Shirts     ®  $10  00 

$40 

00 

4            «     2               11.00 

44 

00 

4            "     3             12.00 

48 

00 

3             "     4             1300 

39 

00 

12           Collars  1.60 

19 

20 

4           Cuffs  3.60 

14 

40 

Case  and  cartage  

0 

1 

50 

$206 

10 

7 

Davis  &  Co.,                                                  4  m. 
Cincinnati. 
5  Doz  No   1  Shirts  @  $10.00 

50 

00 

5             «•     2            11.00 

55 

00 

4            "     3      "                        ....        1200 

48 

00 

2             «    4      ««        13  00 

26 

00 

10           Collars  1.60 

16 

00 

5           Cuffs                                                   3  60 

18 

00 

Case  and  cartage  

op 

1 

50 

214 

50 

6 

J.  C.  Brown  &  Co.,                                      4/60. 
Chicago. 
3  Doz  No  1  Shirts  ©$1000 

30 

00 

3     "       "2      "                                   "     11  00 

33 

00 

2     "       "3      "        "     1200 

24 

00 

12     "     Collars     "       160 

19 

90 

6     "     Cuffs  "       3.60 

21 

60 

8 

Case  and  cartage  
Total  sales  in  February  

1 

50 

129 

$549 

30 
90 

1 

90  BOOKKEEPING  SIMPLIFIED. 

TRIAL  BALANCE. 


-  "We  draw  off  a  Trial  Balance  the  last  day  of  every  month,  or  as 
soon  thereafter  as  possible,  before  any  posting  is  done  for  the 
new  month.  The  twofold  object  is  to  prove  our  posting  and  en- 
able us  to  see  at  a  glance  the  actual  condition  of  each  account. 

The  usual  form  of  a  Trial  Balance  consists  of  a  sheet  of  Journal 
paper  having  two  columns  on  the  extreme  right,  on  which  we 
transfer  every  unbalanced  account  in  the  Ledger,  beginning  with 
the  partners'  stock  accounts,  adding  each  side  of  every  account 
on,  the  Ledger  in  small  pencil  figures  close  to  the  last  amount,  so- 

not  to  be  obscured  by  the  next  entry  posted.  We  take  the 
difference,  placing  it  in  small  pencil  figures  on  the  greater  side 
near  the  folio  column  for  reference ;  also  transferring  it  to  the 
Trial  Balance  in  right-hand  column  if  credit  side  is  the  greater, 
and  in  the  left-hand  column  if  the  debit  side  be  greater.  If  our 
posting  is  correct  and  no  error  is  made  making  out  the  Trial 
Balance,  the  footing  of  the  two  columns  will  be  equal.  If  the 
Trial  Balance  is  correct  the  pencil  footings  on  the  Ledger  are 
also  correct,  and  the  work  up  to  that  point  will  not  have  to  be 
gone  over  again  on  making  Trial  Balance  for  the  next  month ; 
Alienee  the  pencil  footings  are  never  erased.  (Kead  page  247.) 

Another  form  of  Trial  Balance  consists  of  a  sheet  with  four 
columns,  two  on  the  left  and  two  on  the  right  of  the  names ; 
the  two  innermost,  or  those  next  to  the  names,  being  for  the 
total  amount  of  business  represented  by  each  account  during 
the  current  month  both  on  the  debit  and  credit  side.  The  two- 
outside  columns,  one  on  the  extreme  right  and  one  on  the  ex- 
treme left,  will  show  the  balance  same  as  in  first  form  of  Trial 
Balance  alluded  to.  The  two  columns  representing  total  amounts 
must  agree  in  their  footing  ;  also  agree  with  the  total  footing  of 
debit  and  credit  side  of  Cash  Book,  footing  of  Sales  Book  and 
Journal,  including  the  footings  of  the  two  discount  columns  in 
Cash  Book. 

If  neither  of  them  agree  with  the  total  footings  of  all  the 
books,  we  prove  one  side  at  a  time  by  going  over  the  Ledger 
again,  examining  that  side  only  in  each  account,  and  if  necessary 
check  the  postings  on  that  side.  After  proving  both  columns  in 


A  COMMON-SENSE  VIEW  OF  BOOKKEEPING.  91 

this  manner,  which  can  be  done  with  less  mental  strain  than  is  re- 
quired in  proving  i\\Q  difference  in  the  first  form  of  Trial  Balairee,- 
inasmuch  as  we  are  contemplating  but  one  thing  at  a  time  in- 
stead of  three  things  at  the  same  time,  we  then  prove  the  balance 
or  outside  columns  from  the  Trial  Balance  alone,  laying  aside  the 
Ledger  altogether.  We  keep  the  Trial  Balance  for  the  previous 
month  before  us  :  if  the  balance  therein  is  a  credit,  we  add  it  to 
the  amount  in  column  representing  total  credits  in  new  Trial 
Balance,  and  take  the  difference  beeween  the  result  thus  obtained 
and  the  amount  in  the  column  representing  total  debits  in  new 
Trial  Balance,  placing  it  in  the  outside  column  on  whichever  side 
is  greater.  If  no  mistake  is  made  in  the  operation,  the  difference 
thus  obtained  will  be  the  correct  balance  for  the  new  Trial  Bal- 
ance to  an  absolute  certainty.  For  better  understanding  of  the 
process  see  Trial  Balance  for  February  on  page  115. 

The  four-column  Trial  Balance  requires  a  trifle  more  work 
and  many  more  figures  in  the  beginning,  but  in  the  long-run  will 
prove  to  be  a  great  economizer  of  time  and  diminish  the  anxiety 
every  bookkeeper  experiences  when  he  has  an  error  in  his  Trial 
Balance,  to  say  nothing  of  the  monotony  and  annoyance  occasioned 
by  going  over  the  Ledger  time  and  again  with  the  same  fruitless 
result.  See  SIXTH  AFTERTHOUGHT,  page  228. 


CHARTERED  ACCOUNTANT. 

This  is  a  species  of  bookkeeper  peculiarly  indigenous  to  Eng- 
land and  Scotland  and  a  rare  exotic  in  this  country.  To  become 
a  Chartered  Accountant  one  must  have  served  a  five  years'" 
apprenticeship,  same  as  a  poor  shoemaker  who  aspires  to  become 
a  full-fledged  cobbler.  It  is  absurd  for  any  one  capable  of  reason- 
ing from  cause  to  effect  to  waste  five  years  mastering  this  simple 
science.  The  Charter  is  a  kind  of  combination  certificate  of 
proficiency  in  accounting  and  a  license  to  practise  it. 

We  had  occasion  once  to  examine  a  set  of  books  that  had  been 
started  and  kept  according  to  a  plan  laid  out  by  a  so-called 
Chartered  Accountant,  and  we  were  amused  to  find  on  the  main 
Ledger  an  account  called  General  Debtors^  which  was  a  summary 
of  debit  and  credit  results,  the  details  of  which  had  been  posted 


•92  BOOKKEEPING   SIMPLIFIED. 

on  the  Customers'  Ledger,  the  balance  agreeing  with  the  net 
balance  in  all  the  accounts  in  that  Ledger.  Its  object  seemed  to 
be  to  have  the  main  Ledger  balance  within  itself,  which  is  not  at 
all  necessary,  and  to  require  a  seemingly  but  not  actually  shorter 
Trial  Balance.  The  Customers'  accounts  must  each  be  reduced  to 
a  balance  any  way,  hence  it  is  better  to  begin  the  Trial  Balance 
with  the  accounts  on  the  main  Ledger  and  continue  it  with  the 
names  from  the  Customers'  Ledger,  proving  both  Ledgers  with  one 
Trial  Balance,  and  dispensing  with  the  superfluous  or  meaning- 
less General  Debtors'  account. 


THE  LEDGER. 

According  to  old  fogy  methods  every  transaction  was  first 
recorded  in  the  Day-book  or  Memorial  in  a  manner  more  remark- 
able for  its  verbosity  than  for  either  its  faultless  syntax  or 
perspicuity ;  it  was  then  rearranged  iutbe  Journal,  a  process  called 
journalizing,  thence  posted,  thus  making  three  entries,  first, 
intermediate,  and  final. 

According  to  modern  methods  the  intermediate  entry  is  dis- 
pensed with,  also  the  desuete  Day-book,  the  first  entry  being 
made  in  books  specially  designed,  and  the  final  entry  in  the 
Ledger,  the  design  of  which  is  continued  in  its  primitive  sim- 
plicity. 

The  original  design  being  so  near  perfect  that  but  few  innova- 
tions have  been  suggested,  none  of  which  have  ever  successfully 
superseded  it  in  popular  usage.  The  most  noteworthy  was 
interchanging  the  positions  of  credit  dates  and  credit  amounts, 
that  is,  placing  the  dates  on  the  extreme  right  of  the  page,  and 
the  amounts  in  the  middle  of  the  page  next  to  the  debit  amounts. 
The  balance  column,  that  some  use  in  the  Ledger,  is  wholly  super- 
fluous, and  is  love's  labor  lost,  except  in  Banks  where  the  balance 
must  be  shown  after  each  entry  is  made  to  guard  against  over- 
draft of  depositors.  The  disarrangement  of  dates  in  the  Ledger 
has  no  significance  further  than  to  show  that  posting  had  rui? 
behindhand. 


A   COMMON-SENSE   VIEW   OF  BOOKKEEPING.  93 

Dr.  P.  A.  WRIGHT.  Or. 


1885. 

1885. 

— 

.  —  .  — 

7 

To  Cash 

1 

$12 

no 

Jan 

1 

By  Cash 

1 

$1  000 

00 

Feb 

°1 

3 

50 

00 

Feb 

"8 

'  '  Profit  and  Loss 

1" 

225 

23 

"8 

"  Balance  

19 

1,163 

93 

1,225 

23 

1,225 

23 

1885. 

Mar. 

1 

By  Bal.  br'ght  down.. 

1,163 

23 

Dr. 


T.  P.  NOBLE. 


1885. 

1885. 

Jan 

7 

To  Cash  .         ... 

1 

$20 

00 

Jan. 

1 

By  Cash 

1 

$1  000 

00 

Feb. 

98 

"  Balance  

12 

1  205 

93 

Feb 

98 

>k  Profit  and  Loss 

1° 

225 

9S 

1,225 

23 

1,225 

23 

1855. 

Mar. 

1 

By  Bal.  br'ght  down.. 

1,205 

23 

94 
Dr. 


BOOKKEEPING  SIMPLIFIED. 
OFFICE  FURNITURE. 


Or. 


1885. 

1885. 

Jan 

1 

To  Cash  

1 

$245 

00 

Feb. 

98 

By  Balance  

19 

$245 

00 

1885. 

Mar. 

1 

To  Bal.  br'ght  down. 

245 

00 

Dr. 


CASH. 


Cr. 


1885. 

1885. 

Jan 

1/31 

To  Sundries  

9 

$3  533 

78 

Jan 

1/S1 

By  Sundries 

9 

$3006 

15 

Feb 

1/98 

3 

1  562 

43 

Feb. 

1/'8 

3 

1  762 

90 

98 

"  Balance  

19 

327 

86 

5,096 

21 

5,096 

21 

1885. 

Mar. 

1 

To  Bal.  br'ght  down  . 

327 

86 

A   COMMON-SENSE   VIEW    OF   BOOKKEEPING.  95 

Dr.  MERCHANDISE.  Or. 


H885. 

8 

To  Cash 

1 

$100 

00 

1885. 
Jan. 

1  /31 

By  Cash  

? 

$385 

25 

1/31 

6  050 

OC 

1/31 

"    Sunds. 

4 

2  325 

10 

Teb 

g 

"  Bills  Payable 

4 

250 

00 

Feb 

1A>8 

"    Cash  

3 

299 

50 

28 
28 

"  Cash  
"  Davis  &  Co  
"  Profit  and  Loss. 

3 
5 
12 

50 
26 
1,458 

00 
00 
75 

28 
28 

"    Sunds  
"    Inventory  

5 
6 

549 
4,975 

90 
00 

8,534 

75 

8,534 

75 

Mar. 

1 

To  Bal.  (Inventory) 
brought  down.  .. 

4,975 

00 

Dr. 


EXPENSE. 


Cr. 


i885. 
Jan. 

Feb. 

1/31 
31 

1/28 
28 

To  Cash  

2 

3 
3 
5 

$97 
400 
68 
400 

75 

00 
40 
00 

1885. 
Feb. 

28 

By  Profit  and  Loss.. 

12 

$966 

15 

"  Sunds  

"  Cash  

"  Sunds  

906 

15 

$966 

15 

Dr. 


INTEREST. 


Or. 


1885. 

1885. 

Feb. 

28 

To  E.  H.  E.  Wright 

Feb. 

14 

By  Miller  Bros  

4 

40 

&  Co  

4 

$2 

81 

W 

"  Bills  Payable 

4 

$1 

98 

28 

"  Bills  Receivable.. 

5 

1 

08 

28 

"  Profit  and  Loss.  .. 

12 

1 

51 

3 

89 

3 

89 

96 
Dr. 


BOOKKEEPING   SIMPLIFIED. 
E.  H.  E.  WRIGHT  &  CO. 


Or. 


1885. 

1885. 

Jan 

9 

To  Cash     

1 

$500 

00 

Jan 

1/81 

By  Mdse,  n/30  

1 

$3  500 

00 

7 

1 

1,000 

00 

9 

41       it 

0 

300 

00 

Feb 

98 

"  Interest 

\ 

2 

81 

23 

"  Bills  Receivable.. 

2 

281 

04 

29 

"  Bills  Payable  

2 

200 

00 

S^ 

Feb 

98 

"  Balance  

1° 

1,221 

77 

;T 

.X^^ 

3,502 

81 

3,502 

81 

1885. 

Mar. 

1 

By  Bal.  br'ght  down. 

1,221 

77. 

Dr. 


T.  C.  DAVIS  &  SON. 


Or. 


1885. 

1885. 

Jan. 

5 

To  Bills  Payable  

1 

$480 

00 

Jan. 

2 

ByMdse.,4*,4/m.... 

1 

$500 

00 

5 

'*  Discount  

1 

20 

00 

p 

500 

00 

500 

00 

Dr. 


A    COMMON-SENSE   VIEW   OF  BOOKKEEPING.  97 

EARLINGTON  &  CO.  Or. 


1885. 

1885. 

Jan. 

5 

To  Cash,  $470;  disct., 

$30 

1 

$500 

00 

Jan 

1 

By  Mdse,  5/30    ..     .. 

1 

$500 

00 

Feb. 

28 

To  Balance    

12 

750 

00 

23 

"       "      5/30  

2 

750 

00 

1,250 

00 

1,250 

00 

1885. 

Mar. 

1 

By  Bal.  br'ght  down. 

750 

00 

Dr. 


SANDIFORD  &  CO. 


Or. 


1885. 

1885. 

Jan. 

2 

To  Bills  Pay  

1 

$500 

00 

Jan. 

1 

By  Mdse.  n/30  

1 

$500 

00 

Feb. 

28 

"  Balance  

12 

500 

00 

23 

"      "      n/30  

2 

500 

00 

1,000 

00 

1.000 

00 

1885. 
Mar. 

7 

By  Bal.  br'ght  down. 

500 

00 

98 


BOOKKEEPING    SIMPLIFIED. 


Dr. 


MILLER  &  BROTHERS,  St.  Louis. 


Or. 


1885. 
Jan 

1 

To  Mdse  5/30  

1 

$134 

85 

1885. 
Jan. 

3 

By  Cash,  $126.76;  dis- 

5 

tt      ti        n 

2 

76 

80 

count,  $8.09  

1 

$134 

85 

10 

"      "      n/30 

9, 

77 

30 

10 

By  Cash 

g 

76 

55 

Feb 

29 
14 

lv      "       5/30  
"  Cash  

3 
8 

190 

78 

40 
80 

10 
10 

"  Exchange  
"  Bills  Rec  

2 

8 

77 

25 
30 

1<i 

"  Int 

4 

•10 

Feb 

7 

"  Cash  $17898-  dis- 

°8 

"  Bills  Rec 

4 

79 

90 

count,  $11.42 

a 

190 

40 

14 

28 

98 

"  Bills  Receivable.. 
"  Profit  and  Loss.. 
"  Cash  

4 

5 
3 

79 
39 
39 

20 

80 
40 

./^ 

637 

75 

637 

75 

Dr. 


J.  C.  BROWN  &  CO.,  Chicago. 


Or. 


1885. 
Jan 

1 

To  Mdse,  4/60  

1 

$137 

9,5 

1885. 
Tnn 

9, 

By  Bills  Receivable  .  . 

1 

$131 

76 

9 

"      "      n/30 

^ 

13 

00 

0 

"  Discount 

1 

5 

49 

9 

"      "       4/60 

9 

88 

<>5 

9 

"  Cash    

1 

13 

00 

9,3 

"      "       4/60  

| 

204 

50 

93 

"  Sunds  

9, 

292 

75 

80 

"      "      4/60  

4 

189 

30 

Feb 

98 

"  Balance  

19 

318 

60 

Feb 

98 

"      "       4/60 

5 

129 

SO 

761 

60 

761 

60 

1885. 
Mar. 

1 

To  Bal.  br'ght  down. 

318 

60 

Dr. 


A   COMMON-SENSE   VIEW   OF    BOOKKEEPING.  99 

W.  C.  BROWNING  &  CO.,  Detroit.  Or. 


1885. 
Jan 

1 

ToMdse.,  3/90  

1 

$201 

90 

1885. 
Jan. 

9, 

By  Bills  Receivable  . 

1 

$195 

85 

5 

"        "     n/30  

9, 

24 

00 

9, 

"  Discount  

1 

6 

05 

98 

"        u      3/90 

8 

217 

75 

10 

"  Cash 

0 

23 

85 

31 

"      3/90  

4 

215 

10 

10 

"  Exchange  

2 

15 

Feb. 

2 

"      3/90  

5 

206 

10 

31 

"  Sunds  

3 

217 

75 

Feb 

98 

1  '  Balance  

V? 

421 

90 

864 

85 

864 

85 

1885. 

Mar. 

1 

To  Bal.  br'ght  down. 

421 

20 

Dr. 


DAVIS  &  CO.  Cincinnati. 


Or. 


1885. 

1885. 

Jan. 

1 

ToMdse,4/m  

1 

$166 

45 

Jnn 

9,3 

By  Sunds  

9, 

$376 

90 

5 

"       "    4/m 

8 

57 

90 

31 

"  Cash  $5501-   dis- 

8 

"  n/30  

2 

37 

00 

count,  $2.89  

2 

57 

90 

19 

".      "    4/m  

a 

209 

75 

Feb 

98 

"  Mdse  

5 

26 

00 

Feb 

9 

"       "    4/m 

5 

214 

50 

°8 

"  Balance 

1° 

225 

50 

685 

60 

685 

60 

1885. 

Mar. 

1 

To  Bal.  br'ght  down. 

225 

50 

100 


BOOKKEEPING   SIMPLIFIED. 


Dr. 


BILLS  RECEIVABLE. 


Or. 


1885. 
Jan. 

1 

To  Sunds  

1 

$327 

61 

1885. 
Jan 

5 

By  Cash  $323  46-  dis- 

10 

0^ 

"  Miller  &  Bros  ... 
"  Sunds 

2 

0 

1  7 
657 

30 
24 

°? 

count,  $4.15  
"  E  H  E  "W  &  Co 

1 

0 

$327 

281 

61 
04 

Feh 

31 
14 

"  W  C.  B.  &Co.... 
"  Miller  Bros.  .  . 

3 
4 

211 
79 

22 
00 

Feb. 

2 

"  Cash,  $369.75;  dis- 
count $6  45 

s 

376 

oo 

q 

"  Cash 

8 

77 

30 

/ 

0,8 

"  Miller  Bros     

4 

79 

°0 

/ 

?,8 

"  Cash  

8 

100 

00 

/ 

28 

"  Interest  

5 

1 

08 

/ 

28 

"  Balance  

12 

110 

14 

1,352 

57 

1,352 

57 

1885. 
Mar. 

1 

To  Bal.  br'ght  down. 

110 

14 

Dr. 


BILLS  PAYABLE. 


Or. 


1885. 

1885. 

Feb. 

3 

To  Cash  

3 

$500 

00 

Jan. 

5 

By  Sunds  

1 

$980 

00 

23 

u      n 

3 

500 

00 

7 

"  Cash,  $496.25;  dis- 

91 

«      «« 

3 

200 

00 

count  $3  75 

1 

500 

00 

28 

•'      "     

3 

180 

00 

29 

"  E.  H.  E.  W.  &Co.. 

2 

200 

00 

0,8 

'  '  Interest  

4 

1 

98 

Feh 

o, 

"  Merchandise 

4 

250 

00 

28 

"  Balance  

12 

1,048 

02 

9 

"  Cash,  $497.50;  dis- 

count, $2.50  

3 

!     500 

00 

2,430 

00 

2,430 

00 

1885. 

Mar. 

1 

By  Bal.  br'ght  down. 

1,048 

02 

A   COMMON-SENSE  VIEW   OF   BOOKKEEPING. 


101 


Dr. 


DISCOUNT. 


Or. 


1885. 
Jan. 

Feb. 

1 
23 
1/31 
31 

1/28 

To  Sunds  .  . 

1 
2 

2 
3 
3 

$11 
11 
18 
6 
20 

54 
71 
88 
53 
37 

1885. 
Jan. 

Feb. 

5 
1/31 
1/28 
28 

By  T.  C.  D.  &  Co  
"  Sunds    .  . 

1 

2 
3 

12 

$20 
43 
5 

00 
60 
00 
43 

«        u 

tt           u 

"  W.  C.  B.  &Co.... 
'  '  Sunds  

"  Profit  and  Loss.. 

69 

03 

69 

03 

» 

Dr. 


EXCHANGE. 


Cr. 


Jan. 


10 


To  Sunds 


40 


1885. 
Jan. 


By  Profit  and  Loss. . 


40 


102 


BOOKKEEPING   SIMPLIFIED. 


Dr. 


•J.  VIRGIL  WRIGHT  (Bookkeeper). 


O. 


1885. 
Jan 

6 

To  Cash        .  . 

9 

$10 

00 

1885. 
Jan. 

31 

By  Expense 

3 

$125 

00 

31 

9, 

20 

00 

Ffb 

98 

5 

125 

00 

Feb 

7 

u      4t 

8 

15 

00 

98 

"  Balance  

19 

205 

00 

250 

00 

250 

~w 

1885. 
Mar. 

1 

By  Bal.  br'ght  down. 

205 

00 

Dr. 


J.  EDWARD  FORTH  (Salesman). 


Cr. 


1885. 
Jan 

5 

To  Cash 

1 

$25 

00 

1885. 
Jan 

81 

By  Expense 

S 

$125 

00 

SI 

0 

15 

00 

Feb 

98 

<s 

125 

00 

Feb 

y 

M 

3 

25 

00 

98 

"  Balance  

19 

185 

00 

250 

00 

250 

00 

1885. 
Mar. 

1 

By  Bal.  br'ght  down. 

185 

00 

Dr. 


ARTHUR  JOHN    SHELDON. 


Or. 


1885. 
Feb 

?!8 

To  Balance  

19 

$300 

00 

1885. 
Jan 

31 

Bv  Expense  .  . 

8 

$150 

00 

Feb 

98 

ft 

150 

00 

300 

00 

300 

00 

1885. 
Mar. 

1 

By  Bal.  br'ght  down. 

... 

300 

00 

A   COMMON-SENSE  VIEW   OF  BOOKKEEPING.  103 

Dr.  PETIT  ACCOUNTS  RECEIVABLE.  Or. 


1885. 

1885. 



OA 

„,         ,       /v. 

3 

118 

25 

Jan 

31 

By  Cash 

0 

$18 

95 

30 

Wm.  Ward,  n/30.... 

4 

18 

15 

on 

1 

15 

40 

Jan 

31 

"  Cash  

g 

15 

40 

31 

L  Powell  n/30  .. 

4 

31 

80 

Dr. 


PETIT  ACCOUNTS  PAYABLE. 


Or. 


1885. 

1885. 

Feb. 

6 

To    Cash,    $95;     dis- 

count, $5  

3 

$100 

00 

Jan. 

2 

J.  K.  Boss  &  Co.,  5/30. 

1 

$100 

00 

Jan. 

10 

"   Cash,    $47;     dis- 

count, $3  

2 

50 

00 

2 

Johnson  &  Co.,  5/30.  . 

1 

50 

00 

10 

"    Cash,  $23.50;  dis- 

count, $1.50.... 

2 

25 

00 

2 

Lindsay  &  Co.,  5/30.. 

1 

25 

00 

29 

W.  F.  Saze,  5/30  

2 

95 

00 

31 

"  Cash,  $120.90;  dis- 

count, $9.10.... 

130 

00 

29 

Martin  &  B.,  5/30.  .  .  . 

2 

130 

00 

104 


BOOKKEEPING  SIMPLIFIED. 


Dr. 


PROFIT  AND   LOSS. 


Or. 


1885. 
Feb 

28 

To  Miller  Bros 

*i 

$39 

80 

1885. 
Feb 

28 

By  Mdse 

•^ 

$1  458 

75 

28 

^ 

966 

15 

«>S 

"  Interest 

3 

1 

*>1 

°8 

"  Discount  

q 

-13 

• 

28 
28 
28 

"  Exchange  
"  P.A.Wright..   . 
"  T.  P.  Noble  

9 
1 
1 

225 
225 

40 
23 
23 

1,458 

75 

1,458 

75 

Dr. 


BALANCE. 


Cr. 

Liabilities. 


1885. 
Feb. 

28 
98 

Office  Furniture  
Cash           

2 

9, 

$245 
327 

00 

86 

1885. 
Feb. 

28 
98 

E.  H.E.  Wright  &  Co. 
Earlington  &  Co  

4 
5 

$1,221 
750 

77 
00 

98 

Inventory  

8 

4,975 

00 

98 

Sandford  &  Co  

5 

500 

00 

Q8 

J  C  B  &  Co 

6 

318 

60 

98 

Bills  Pay 

ft 

1  048 

00 

98 

W  C  B  &  Co 

7 

421 

90 

98 

J  E  Forth  

10 

185 

00 

98 

Davis  &  Co  

225 

50 

98 

J.  Virgil  Wright  

10 

205 

00 

Oft 

Bills  Rec 

8 

110 

14 

°8 

A  Sheldon 

10 

300 

00 

"8 

Win  Ward 

11 

18 

1*> 

°8 

W  F  Saxe 

11 

95 

00 

98 

L  Powell       

11 

31 

80 

07 

P  A  Wright.  ... 

1 

1,16S 

93 

T  P  Noble 

1 

1  205 

°? 

6,673 

25 

6,673 

25 

| 

A   COMMON-SENSE   VIEW    OF   BOOKKEEPING.  105 


LEDGER   ACCOUNTS   ELUCIDATED. 

The  two  accounts  on  the  first  page  of  miniature  Ledger  are  the 
partners'  Stock  accounts,  and  their  Personal  accounts  under  the 
same  headings.  They  are  usually  kept  separately  ;  that  is,  the  Per- 
sonal accounts  are  kept  on  another  page.  This,  however,  is  abso- 
lutely unnecessary,  as  both  can  be  combined  under  one  heading: 
Capital  account  representing  money  paid  in,  and  therefore  a  credit; 
the  Personal  account  representing  money  drawn  out,  and  therefore 
always  a  debit.  Hence  it  will  be  seen  that  even  under  the  same 
heading  they  can  in  no  wise  conflict.  Furthermore,  when  the 
Personal  account  is  kept  on  a  separate  page,  it  is  finally  closed  into 
the  Capital  account  at  the  end  of  the  season.  See  Rule  for  dos- 
ing books,  page  43. 


OFFICE   FURNITURE. 

This  is  a  Representative  account,  showing  the  amount  we  have 
invested  in  various  articles  of  furniture  in  the  office.  The  first 
entry  in  this  account  is  always  a  debit ;  in  fact,  the  only  credit 
likely  to  occur  is  after  several  years'  use,  when  we  charge  a  small 
percentage  to  Profit  and  Loss,  and  credit  Office  Furniture  thereby. 
The  difference  between  the  two  sides  will  represent  present  valua- 
tion, and  part  of  our  assets. 


CASH. 

This  account  could,  with  all  due  propriety,  be  omitted  from  the 
Ledger,  as  the  Cash  Book  is  the  only  cash  account  ever  examined 
and  shows  all  the  facts  of  the  Ledger  Cash  account ;  that  is,  the 
total  receipts  and  total  disbursements  each  month,  and  the  bal- 
ance. The  debit  side,  of  course,  must  always  be  the  greater  if 
there  is  any  difference,  and  is  the  most  desirable  kind  of  assets. 


106  BOOKKEEPING   SIMPLIFIED. 


MERCHANDISE. 

The  debit  side  of  this  account  shows  the  amount  of  all  goods 
received,  either  purchased  or  returned,  the  cost  price  of  the  for- 
mer, and  the  selling  price  of  the  latter. 

The  credit  side  represents  the  sales ;  the  difference  between  the 
two  sides  will  represent  no  definite  amount,  because  each  side  re- 
presents a  different  value  of  the  same  thing.  By  adding  the 
amount  of  Inventory  to  the  credit  side,  and  deducting  therefrom 
the  amount  of  debit  side,  the  difference  if  in  favor  of  credit  side 
will  represent  the  profit  on  merchandise  sold ;  this  difference,  de- 
ducted from  the  amount  of  Inventory,  will  agree  with  the  first 
difference  in  the  Merchandise  account  before  the  Inventory  is 
considered. 

The  Inventory  being  placed  on  the  credit  side  by  Single  Entry 
must  be  brought  down  on  the  debit  side,  thereby  constituting 
the  Double  Entry,  and  is  called  the  balance  of  Merchandise,  which 
represents  part  of  our  resources. 


EXPENSE. 

There  is  rarely,  if  ever  a  credit  in  the  Expense  account,  as  it  re- 
presents money  invested  in  things  that  are  consumed,  or  for  which 
we  get  no  direct  returns.  This  is  one  of  the  principal  divisions  of 
the  Profit  and  Loss  account,  and  is  often  subdivided  into  many 
other  accounts,  according  to  the  requirements  of  the  business,  such 
as  Travelling  Expense,  Salaries  or  Wages,  Postage  and  Print- 
ing, Advertising,  Petty  Items,  etc. 


INTEREST. 

The  debit  side  shows  how  much  we  have  paid  for  use  of  money, 
and  the  credit  side  shows  how  much  we  have  received  for  use  of 


A    COMMON-SENSE   VIEW    OF   BOOKKEEPING.  107 

money  due  us.     If  debit  side  is  the  greater  it  shows  a  loss,  and 
if  credit  side  is  the  greater  it  will  show  a  gain. 


THE   NEXT   FOUR   ACCOUNTS 

represent  our  creditors — parties  from  whom  we  buy,  the  credit 
side  of  each  account  showing  how  much  we  have  bought,  and  the 
debit  side  how  much  we  have  paid  each ;  the  Balance  indicates 
how  much  we  still  owe  them,  and  is  part  of  our  Liabilities. 

If  the  debit  side  had  been  the  greater,  it  would  have  shown  that 
we  had  overpaid  them  and  that  they  owed  us. 


THE   NEXT    FOUR   ACCOUNTS 

represent  our  customers — parties  to  whom  we  sell.  The  debit 
side  of  their  accounts  represents  the  amount  of  goods  sold  to  each ; 
the  credit  side,  the  amount  that  has  been  satisfactorily  settled  for; 
and  the  balance  shows  the  amount  each  one  owes  us,  and  is  part 
of  our  resources. 

If  the  credit  side  had  been  the  greater,  it  would  have  shown 
that  they  had  overpaid  us ;  hence  we  would  owe  them. 


BILLS    RECEIVABLE. 

The  debit  side  of  this  account  shows  the  amount  of  other  par- 
ties' notes  received  by  our  iirm ;  the  credit  side  shows  the  amount 
that  has  been  paid  or  negotiated  ;  the  balance  shows  the  amount  of 
other  parties'  notes  on  hand.  (See  Bills  Receivable  Book,  page 
126.)  This  balance  represents  part  of  our  Resources. 

The  first  entry  in  this  account  is  always  a  debit,  because  our 
rule  is  to  debit  whatever  we  receive  ;  and  we  must  receive  another 
party's  note,  thereby  charging  Bills  Receivable  account  before 
we  can  possibly  return  it  whereby  Bills  Receivable  would  be 
credited,  and  for  the  same  potent  reason  the  debit  side  of  this 
account  must  be  the  greater  if  there  is  a  difference. 

It  is  customary  to  hold  all  notes  of  this  kind  until  enough  have 
accumulated  to  make  a  respectable  offering  for  discount.  We 


108  BOOKKEEPING   SIMPLIFIED. 

then  make  out  a  list  showing  name  of  makers,  where  payable, 
when  due,  and  amount  of  each,  also  total  amount  of  offering, 
attach  the  notes  thereto,  and  submit  them  to  our  Bank  for  dis- 
count and  credit  of  our  account,  less  discount  for  unexpired  time. 

If,  however,  we  hold  a  note  until  maturity  we  save  the  dis- 
count, and  if  the  note  is  payable  at  the  office  or  Bank  of  the 
party  who  drew  it,  we  send  it  forward  for  collection  in  time  to 
reach  the  place  of  payment  on  or  before  maturity ;  this  is  neces- 
sary in  order  to  bind  all  endorsers  to  the  note,  which  would  have 
to  be  presented  on  the  day  of  maturity,  and  if  not  paid  be  pro- 
tested. If  not  duly  protested  the  endorsers  would  be  exempt 
from  all  obligation. 

In  collecting  a  note  at  a  distance,  we  send  it  to  the  cashier  of 
some  Bank  located  in  the  town  or  place  where  the  note  is  pay- 
able, endorsing  it  in  his  favor,  adding  "for  collection;"  by  this 
method  we  get  returns  more  promptly  than  by  sending  it  through 
our  own  Bank  for  collection,  as  the  latter  method  would  require 
the  difference  in  time  consumed  in  the  correspondence  between 
our  Bankers  and  their  correspondents,  which  is  often  done  peri- 
odically and  not  daily. 

If  any  note  previously  discounted  at  our  Bank  be  protested,  it 
is  returned  to  us  by  our  Bankers,  to  whom  we  give  a  check  for 
the  face  of  note,  including  protest  fees,  the  total  amount  of  which 
we  charge  to  the  party  from  whom  we  received  it  in  the  first 
place,  thereby  throwing  their  obligation  into  an  open  account 
again. 

If  they  can  render  satisfactory  explanation  as  to  why  the  note 
was  permitted  to  go  to  protest,  we  accept  a  new  note  for  the 
same  amount,  including  protest  fees  and  interest  for  the  time  new 
note  has  to  run,  giving  the  party  credit  by  amount  of  new  note, 
and  charging  their  account  with  the  interest. 

All  entries  on  our  books  embodying  notes  should  specify  date 
of  notes,  time  to  run,  amount,  where  payable;  and  in  whose  favor 
they  are  given. 

If  we  desire  to  transfer  a  note  payable  to  our  own  order, 
without  being  liable  as  endorser,  we  endorse  it  "  without  re- 
course." 

If  a  note  or  bill  is  transferred  as  security,  or  even  as  payment 


A   COMMON-SENSE   VIEW    OF   BOOKKEEPING.  109 

of  a  pre-existing  debt,  the  debt  revives  if  the  bill  or  note  be  dis- 
honored. 

"Yalue  received"  is  usually  written  in  a  note  and  should 
be,  but  is  not  absolutely  necessary  to  the  validity  of  the  note. 
If  not  written,  it  is  presumed  by  the  law,  or  may  be  supplied  by 
proof. 

An  oral  agreement  must  be  proved  by  evidence,  whereas  a 
written  agreement  proves  itself.  The  difference  between  Bills 
Receivable  and  Accounts  Receivable  is,  the  former  is  a  written 
agreement  and  the  latter  an  oral.  one.  and  as  the  law  prefers  writ- 
ten to  oral  evidence  because  of  its  precision,  it  is  to  our  advantage 
to  have  open  accounts  closed  by  note  if  not  due. 

It  sometimes  supervenes  that  we  desire  to  withdraw  notes  pre- 
viously discounted  in  bank  and  substitute  others  of  equal  amount 
but  possibly  unequal  time  to  run.  In  such  a  case  we  submit  the 
substitutes  as  a  new  offering  for  discount,  the  proceeds  of  which 
we  use  in  paying  withdrawn  notes  less  interest  for  unexpired  time. 


BILLS   PAYABLE. 

The  credit  side  of  this  account  shows  the  amount  for  which  our 
note  has  been  given,  the  debit  side  the  amount  we  have  paid  or 
taken  up,  and  the  balance  represents  the  amount  of  our  notes  still 
afloat,  constituting  part  of  our  liabilities,  and  will  agree  with  the 
Bills  Payable  Book.  The  credit  side  of  this  account  will  always 
be  the  greater  when  there  is  a  difference,  the  reason  being  the 
reverse  of  that  given  in  relation  to  Bills  Receivable. 


DISCOUNT. 

The  debit  side  of  this  account  represents  the  amount  we  have 
lost  in  discounting,  the  credit  side  the  amount  gained  through 
the  same  operation  ;  and  the  difference,  if  a  debit,  will  show  net 
loss,  if  a  credit,  it  will  show  net  gain  in  discounting. 


110  BOOKKEEPING   SIMPLIFIED. 


EXCHANGE. 

The  object  of  keeping  this  account  is  to  be  able  to  find  out 
how  much  we  have  paid  during  the  year  or  season  for  collecting 
notes,  drafts,  and  out-of-town  checks.  It  represents  a  loss. 


J.  VIRGIL  WRIGHT  AND  J.  EDWARD  FORTH. 

Two  instances  in  which  we  keep  an  open  account  with  em- 
ployees, the  debit  side  showing  how  much  they  have  drawn,  and 
the  credit  side  the  amount  they  are  entitled  to,  by  agreement ; 
the  Balance,  if  a  credit,  will  show  how  much  we  still  owe  them, 
being  part  of  our  Liabilities,  or  if  debit  side  is  the  greater,  it 
would  show  how  much  they  had  overdrawn,  and  represent  part 
of  our  assets. 

We  require  employees  who  are  engaged  by  the  week  to  accept 
their  dues  every  Saturday  night,  so  as  not  to  necessitate  keeping  an 
open  account  with  them,  the  amount  being  charged  direct  to  ex- 
pense through  the  Expense  column  in  the  Cash  Book. 


ARTHUR   JOHN    SHELDON. 

This  is  an  account  with  our  Landlord,  whom  we  pay  quarterly 
We  credit  his  account  monthly,  however,  in  order  to  have  our 
books  show  correctly  every  month,  upon  taking  of  Trial  Balance, 
how  much  we  owe ;  the  balance  is  part  of  our  Liabilities. 


PETIT  ACCOUNTS   RECEIVABLE. 

Under  this  heading  we  keep  the  account  of  all  parties  not  like- 
ly to  buy  a  second  time,  and  therefore  not  entitled  to  more  than 
a  single  line  in  our  Ledger. 


A   COMMON-SENSE  VIEW   OP  BOOKKEEPING.  Ill 

The  manner  of  dealing  with  small  accounts  of  this  kind  is  some- 
what irregular  or  different  to  regular  Ledger  accounts,  inasmuch 
as  they  are  not  closed  By  Balance  at  the  end  of  the  year,  but  left 
in  statu  quo  until  paid  or  finally  adjusted.  They  are  considered 
individually  in  making  out  Trial  Balance,  also  indexed  as 
though  each  occupied  a  full  page.  In  case  of  partial  payment, 
enter  the  amount  within  the  space  for  descriptive  matter,  and  the 
gap  in  the  amount  column  will  indicate  the  account  is  still  open. 


PETIT  ACCOUNTS  PAYABLE. 

Under  this  heading  we  keep  the  account  of  all  parties  we  owe 
small  amounts,  and  from  whom  we  are  not  likely  to  buy  a  second 
time.  Such  accounts  are  managed  in  the  same  way  as  Petit  Ac- 
counts Receivable,  and  represent  Liabilities. 


PROFIT   AND   LOSS. 

This  account  is  a  final  recapitulation  of  total  gains  and  total 
losses ;  the  various  accounts  representing  profits  or  losses  through- 
out the  Ledger  being  closed  or  merged  into  this  account  at  the 
end  of  each  season.  The  debit  side  representing  total  losses,  and 
the  credit  side  total  gains,  the  difference  total  net  gain  if  credit 
side  be  the  greater,  and  total  net  loss  if  the  debit  side  be  the  greater. 
It  is  closed  into  the  several  partners'  Stock  accounts,  in  red  ink,  by 
crediting  each  with  his  pro  rata  of  net  gain,  or  charging  each 
with  his  pro  rata  of  net  loss.  See  Rules  for  dosing  looks,  page 
43. 


BALANCE. 

This  is  not  a  regular  Ledger  account,  but  is  introduced  in  the 
miniature  Ledger  to  illustrate  the  idea  of  Eesources  and  Liabilities, 


112  BOOKKEEPING   SIMPLIFIED. 

and  prove  the  correctness  of  our  conclusion  ;  that  is,  we  must  have 
Resources  enough  to  pay  off  all  our  Liabilities,  and  be  able  to 
draw  out  of  the  business,  if  we  desire  to  discontinue,  the  amount 
of  net  capital  indicated  by  our  Capital  account. 

The  impracticability  of  such  an  account  in  the  Ledger  will  be 
seen  when  it  is  taken  into  consideration  that  we  may  have  several 
thousand  open  accounts  on  our  Ledger,  and  to  transfer  the  bal- 
ance from  each  would  be  no  small  job,  to  say  nothing  of  the  many 
valuable  Ledger  pages  that  would  be  uselessly  consumed  by  the 
operation. 

Our  final  Balance  Sheet  takes  the  place  of  this  account. 


DEPARTMENT   ACCOUNTS. 

Department  accounts  are  required  when  it  is  desired  to  know 
how  much  we  make  on  each  branch  of  our  business.  For  exam- 
ple, we  assume  that  we  keep  a  general  store, — that  is,  Dry  Goods, 
Groceries,  Boots  and  Shoes,  Hats  and  Caps,  etc., — and  we  desire  to 
know  at  the  end  of  the  season  which  has  yielded  the  greatest  pro- 
fit. We  open  an  account  with  Dry  Goods  Department,  Grocery 
Department,  etc.,  and  charge  each  with  cost  of  all  goods  supplied 
therewith.  We  also  have  a  Sales  Book  for  each  department,  or  a 
special  column  in  a  general  Sales  Book,  representing  each  depart- 
ment, the  footing  of  which — that  is,  the  Special  column  or  Special 
Sales  Book — at  the  end  of  the  month  would  be  carried  to  the 
credit  side  of  its  respective  department  account.  We  would  also 
keep  a  separate  Expense  account  for  each  department,  charging  it 
with  all  items  of  expense,  known  to  have  been  incurred  exclusively 
in  the  interest  of  that  department.  We  would  also  keep  a  General 
Expense  account  for  such  items  of  expense  as  were  common  to  all 
the  departments,  such  as  office  help,  incidental  office  expenses,  etc. 
Upon  closing  the  books,  the  General  Expense  account  would  be 
divided  among  all  the  Department  Expense  accounts  in  propor- 
tion to  the  amount  of  capital  invested  in  each  department,  that 
is,  as  the  total  amount  of  capital  in  all  the  departments  is  to  the 


A   COMMON-SENSE  VIEW   OF  BOOKKEEPING.  113 

amount  of  capital  in  each  department,  so  is  the  total  amount  of 
General  Expense  to  each  department's  expense. 

We  would  close  the  Department  Expense  account  into  its  respec- 
tive department  account,  which  would  then  show  the  gain  or  loss 
thereon,  after  crediting  the  department  by  its  Inventory.  Each 
department  account  would  then  be  closed  into  the  general  Profit 
and  Loss  account,  in  the  same  manner  as  a  regular  Merchandise 
account. 


HOW  TO  DETERMINE  WHAT  BILLS  ARE  UN- 
SETTLED. 

In  a  business  of  great  magnitude  there  are  often  unsettled  ac- 
counts, each  amounting  to  many  thousands  of  dollars,  composed 
of  a  great  number  of  small  amounts,  occurring  on  different  dates, 
having  unequal  time  to  run.  There  are  also  frequent  payments, 
from  time  to  time,  covering  certain  bills,  but  not  in  the  same  or- 
der of  dates  on  which  they  are  charged ;  hence  it  becomes  neces- 
sary to  have  a  system  by  which  to  identify  every  item  of  debit 
and  credit  that  enters  into  each  settlement,  in  order  that  we  may 
be  able  to  tell  at  a  glance  what  bills  remain  unpaid.  Without 
such  a  system  it  would  be  next  to  impossible  to  render  a  correct 
statement  of  an  account  of  this  kind  after  it  had  run  for  years,  as 
they  often  do  without  a  full  settlement.  To  overcome  this  diffi- 
culty, we  classify  first  payment  as  letter  "  a  "  or  figure  "  1,"  and 
enter  in  red  ink  within  amount  column,  next  to  folio  line,  oppo- 
site each  item  of  credit,  entering  into  the  settlement  "a"  or  "1," 
whichever  is  adopted,  also  the  same  mark  of  identification  oppo- 
site each  item  of  debit  covered  thereby. 

In  the  second  payment  we  mark  every  item  of  debit  and  credit 
it  covers  as  "b"  or  "2,"  and  so  on  with  each  settlement  alpha- 
betically or  numerically  to  the  closing  of  the  account.  After  us^ 
ing  all  the  letters  in  the  alphabet,  we  begin  with  capitals,  using 
all  again  ;  then  adopt  numbers. 


114 


BOOKKEEPING   SIMPLIFIED. 

FOUR-COLUMN 
TRIAL   BALANCE,  JAN.  31sT,  1885. 


1 

$12 

00 

P.  A.  Wright  

$1,000 

00 

$988 

00 

1 

20 

00 

T  P  Noble 

1  000 

00 

980 

00 

2 

9, 

$245 
527 

00 
68 

245 
3  533 

00 

78 

Office  Furniture.  .  . 
Cash  

5006 

15 

3 

4039 

65 

6  750 

00 

Merchandise 

2  710 

85 

8 

497 

75 

497 

75 

Expense  

4 
4 
5 
5 

Q 

190 

40 

2,281 
500 
500 
500 
479 

04 
00 
00 
00 
35 

E.  H.E.  Wright  &  Co 
T.  C.  Davis  &  Co.  . 
Earlington  &  Co. 
Sandiford  &  Co.  .  .  . 
Miller  Bros 

8,500 
500 
1,250 
1,000 

288 

00 
00 
00 
00 
95 

1,218 

750 
500 

96 

00 
00 

6 

7 
7 

189 
215 
37 

30 
10 
00 

632 

658 
471 

30 

75 
10 

J.  C.  Brown  &  Co.. 
W.C.Browning&Co 
Davis  &  Co  

443 
443 
434 

00 
65 
10 

8 
8 

664 

72 

1,273 

37 

Bills  Receivable  
Bills  Payable     .  . 

608 
1,680 

65 
00 

1,680 

Or) 

q 

48 

66 

Discount  

63 

60 

14 

94 

9 

40 

40 

Exchange 

10 
10 
10 
11 

18 

15 

40 
30 

18 

00 
00 

15 

J.  Edward  Forth..  . 
J.Virgil  Wright..  . 
Arthur  J.  Sheldon  .  . 
Wm.  Ward  

125 
125 
150 

00 
00 
00 

85 
95 
150 

00 
00 
00 

11 

18 

95 

Wm  French 

18 

95 

11 

15 

40 

James  Elston  

15 

40 

11 

31 

80 

31 

80 

L  Powell 

11 
11 

50 

00 

J.  K.  Ross  &  Co.... 
Johnson  &  Co  .  .  . 

100 
50 

00 
00 

100 

00 

11 

25 

00 

Lindsay  &  Co  

25 

00 

11 

W  F  Saxe 

95 

00 

95 

00 

11 

130 

00 

Martin  &  Brown  .  .  . 

130 

00 

$6,656 

90 

$18,762 

10 

$18,762 

10 

$6,656 

90 

Footing,  C.  B.,  Cr.  . 
Footing,  C.  B.,  Dr.. 
Discount  col.  (C.  B.), 
Dr 

$3,006 
3,533 

18 

15 

78 

88 

Discount  col.  (C.  B.), 
Cr  

43 

60 

Footing,  S.  B  ..... 
Footing,  Journal.  .  . 

2,325 
9,834 

10 
59 

$18,762 

10 

A   COMMON-SENSE   VIEW   OF  BOOKKEEPING. 

TRIAL  BALANCE,  FEB.  28TH,  1885. 


115 


1 

$50 

00 

P.  A.  Wright.  . 

$QOQ 

oo 

1 

T  P  Noble.     . 

QfiO 

oo 

2 
9, 

$245 
327 

00 

86 

1  562 

43 

Office  Furniture  — 
Cash  

*•!  700 

90 

you 

uu 

3 

8 

3,516 
966 

25 

15 

326 

468 

00 
40 

Merchandise  
Expense     

849 

40 

3 

1 

51 

3 

89 

Interest  

Q 

qo 

4 
5 
5 
6 

158 

40 

E.  H.E.  Wright  &  Co. 
Earlington  &  Co.  .  . 
Sandiford&  Co..  .. 
Miller  &  Bros  

2 
040 

81 

QA 

1,221 
750 
500 

77 
00 
00 

6 

7 
7 

318 
421 
225 

60 
20 
50 

129 
206 
214 

30 
10 
50 

J.  C.  Brown  &  Co.. 
W.  C.  Browning  &  Co 
Davis  &  Co  

no 

00 

8 
8 

110 

14 

79 
1  381 

20 

98 

Bills  Receivable.  .  .  . 
Bills  Payable 

633 

r/K(\ 

78 
oo 

1(\AQ 

oo 

9 

48 

20 

37 

Discount          ... 

uu 
oo 

,U4o 

\tm 

9 

40 

Exchange  

10 
10 
10 

25 
15 

00 
00 

J.  Edward  Forth... 
J.  Virgil  Wright.  .. 
A  J   Sheldon 

125 
125 

1  *iO 

00 
00 
oo 

185 
205 

QOO 

00 
00 
oo 

11 

18 

15 

Wm    Ward  

uu 

oUU 

11 

31 

80 

L  Powell  

11 

100 

00 

J  K  Ross 

11 

W  F   Saxe 

G~ 

oo 

12 

39 

80 

39 

80 

Profit  and  Loss  

yo 

uu 

$6,222 

79 

$4,780 

37 

$4,780 

37 

$6.222 

79 

Journal  Footing.  .  .  . 
C.  B.,  Cr.,  Footing. 
C.  B.,  Dr.,         "      . 
Disct.    (C.  B.),  Cr., 
Footing  

$880 
1,762 
1,562 

47 
20 
43 

00 

Disct.  (C.  B.),   Dr., 
Footing.  ;  

90 

07 

Sales  Book 

KAQ 

QO 

Total  

&A   7Qfl 

07 

116 


BOOKKEEPING    SIMPLIFIED. 


$ 

CL.  M 

ku  & 

ta  o 

Cb  ^ 

fe  ^ 


II 


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§8  . 


•  S    § 


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i:l 


BALANCE   SHEET. 

BALANCE    SHEET. 


117 


268.  The  Balance  Sheet  is  made  from  the  last  Trial  Balance, 
usually  according  to  the  form  given  below.  On  page  116  will  be 
found  another  form  more  artistic  in  design  an(i  better  calculated 
to  impress  our  employers  that  we  are  expert  in  our  business. 

BALANCE  SHEET,  FEBRUARY  29TH,  1888. 
P.  A.    Wright  &  Co.,  New  York. 


LOSSES. 

GAINS. 

Miller  &  Bros., 

102 

56 

Mdse., 

1126 

65 

Expense, 

960 

75 

Discount, 

68 

92 

Interest, 

16 

82 

^^^ 

Exchange, 
P.  A.  W.'s  net  gain,  (Red  ink.) 

1 

57 

25 

09 

^^^ 

(Junior's)  net  gain,  (Red  ink.) 

57 

08 

^^^^^ 

1195 

57 

1195 

5* 

ASSETS. 

LIABILITIES. 

Accounts  Receivable, 
Bills  Receivable, 

1382 
100 

35 

00 

Accounts  Payable, 
Bills  Payable, 

6165 
500 

35 

00 

Cash, 
Mdse.  (Inventory), 
Office  Furniture, 

155  50 
7300  00 
24500 

P.  A.  W.  balance  1453.33 
\  net  gain  57.09 
"        net  capital,  (Red  ink.) 

1510 

42 

- 

Junior's  balance,     950.00 

^______—  -  —  •       " 

i  net  gain,  57.08 

I 

— 

net  capital,  (Bed  ink.) 

1007  08 

9182 

85 

9182  85 

This  Balance  Sheet  is  made  from  the  EIGHTEEN  LESSONS  course 
of  practice.  The  Balance  Sheet  opposite  on  page  116  is  from  the 
Miniature  Set.  On  page  131  is  a  single  entry  exhibit  from  the 
EIGHTEEN  LESSONS  also. 


118 


BOOKKEEPING   SIMPLIFIED. 


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A    COMMON-SENSE   VIEW   OF   BOOKKEEPING. 


119 


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BOOKKEEPING   SIMPLIFIED. 


NEW  YORK,  Jan. 
NAL  BANK, 


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NATIONAL  BANK, 
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A   COMMON-SENSE  VIEW    OF   BOOKKEEPING.  121 

CHECK  BOOK— Continued. 


Balance  brought  forward  

$4 

70 

Feb.  9,  Deposited  for  Collection  Miller  Bros.'  note,  due  13th 

77 

30 

Feb  9,  Proceeds  of  note 

82 
497 

00 
50 

Feb.  14,  Less  Miller  Bros.'  note,  returned  protested  

579 

77 

50 
30 

Feb.  21,  Note  due  to-day  

502 
200 

20 
00 

Deduct  check  No.  9  0  ......       .              ...     . 

302 
180 

20 

oo 

122 

20 

This  corresponds  to  back  of  Stub  of  Checks  not  used. 

DEBIT. 

The  way  to  read  the  rules  on  page  63  is  as  follows  :  When  prop- 
erty of  any  description  enters  it  is  iirst  carried  to  the  debit  of  the 
account  which  represents  it.  If  the  person  who  gives  value  has 
not  received,  or  is  not  to  receive  hereafter,  an  equivalent  for  it, 
this  person  cannot  be  credited  since  he  does  not  remain  a  creditor" 
but  in  double  entry  it  is  necessary  to  oppose  to  the  debtor  item  in 
every  account,  a  creditor;  we  therefore  substitute  a  nominal  or 
impersonal  creditor,  which  takes  the  title  most  proper  to  point 
out  the  nature  and  origin  of  the  transaction. 

CREDIT. 

When  property  of  any  description  goes  out  it  is  first  carried  to 
the  credit  of  the  account  which  represent  it.  If  the  person 
who  receives  value  has  not  given,  or  is  not  to  give  hereafter,  an 
equivalent  for  it,  this  person  cannot  be  debited  since  he  does  not 
remain  a  debtor"  but  in  double  entry  it  is  necessary  to  oppose  to 
the  creditor  item  in  every  account,  a  debtor  ;  we  there  substitute 
a  nominal  or  impersonal  debtor,  which  takes  the  place  most  proper 
to  point  out  the  nature  and  origin  of  the  transaction. 


BOOKKEEPING   SIMPLIFIED. 

TRIAL    BALANCE    BOOK. 

This  book  is  ruled  with  six  sets  of  columns,  that  is,  twelve 
columns  altogether,  requiring  one  column  each  for  the  debits 
and  the  credits,  which  constitute  a  set  and  represent  the  Trial 
Balance  for  one  month.  The  object  is  to  save  writing  the  names 
but  once  in  six  months,  and  to  show  the  balances  for  that  time  in 
juxtaposition  for  comparison.  It  requires  two  pages  of  an  or- 
dinary book  to  make  one  page  in  the  TKIAL  BALANCE  BOOK, 
that  is,  pages  2  and  3  when  the  book  is  open  are  regarded  as 
one  page.  On  the  extreme  left  is  a  small  column  for  Ledger 
folios,  followed  by  a  wide  space  for  the  names,  which  are  alpha- 
betically arranged  with  sufficient  number  of  lines  left  after  last 
name  under  every  letter  of  the  alphabet  for  all  new  names  that 
may  be  introduced  as  Ledger  accounts  during  the  next  five 
months.  More  lines  are  left  after  B's,  M's,  S's,  and  W's  than  any 
other  letters,  as  there  are  more  names  beginning  with  those 
initials  than  any  other  of  the  26  letters.  After  the  names 
follow  the  columns,  the  first  two  of  which  will  be  headed  with 
the  month  on  which  the  first  Trial  Balance  appears  in  the  book, 
the  next  two  being  headed  with  the  next  month  in  order,  and  so 
on  for  six  months. 

It  will  be  seen,  therefore,  that  writing  the  names  the  first  month 
will  answer  for  the  next  five  months  also.  The  Trial  Balance 
is  first  drawn  off  on  journal  paper,  as  before  explained,  and 
proven  ;  then  copied  into  the  Trial  Balance  Book.  If  it  is  first 
drawn  off  the  Ledger  into  this  book,  and  there  should  be  an  error, 
it  would  be  extremely  inconvenient  to  find  it  unless  the  accounts 
were  arranged  in  the  Ledger  alphabetically  also,  as  it  would 
require  constant  turning  from  one  part  of  the  Trial  Balance  Book 
to  another  to  find  the  names  in  checking  the  transfers  from 
Ledger  to  Trial  Balance.  As  the  principal  object  of  the  Trial 
Balance  is  to  prove  our  posting,  we  may,  therefore,  regard  the  Trial 
Balance  Book  as  being  more  in  the  way  than  otherwise,  and  file 
original  sheet  for  reference  instead  of  copying  it  into  this  book, 
which  would  entail  a  great  deal  of  work  without  its  correspond- 
ing advantages.  This  book  is  adapted  to  the  ordinary  two-column 
Trial  Balance  described  on  page  90.  It  must  be  understood  that 
a  Trial  Balance  is  not  the  result  of  differences  for  its  respective 
month's  busness,  but  is  the  net  result  or  difference  between  the 


A    COMMON-SENSE   VIEW    OF   BOOKKEEPING.  123 

total  footings  of  the  debit  and  the  credit  side  of  every  unbalanced 
account  in  the  Ledger  from  the  beginning  of  the  account  or_from 
its  last  closing  up  to  the  time  of  taking  off  present  Trial  Balance. 

ASSISTANT  BOOKKEEPER'S  DUTIES. 

In  the  absence  of  the  head  bookkeeper  the  assistant  takes  his 
place.  He  makes  statements  of  accounts  when  asked  for,  audits 
remittances,  sends  receipts  therefor,  makes  up  the  deposit, 
sends  it  or  takes  it  to  Bank,  makes  memoranda  of  important 
matters  requiring  the  attention  of  the  chief  on  his  return,  but 
would  not  be  permitted  to  do  any  writing  on  the  principal  books 
except,  perhaps,  post ;  then  he  wrould  not  open  any  new  account  on 
the  Ledger  if  one  had  been  started  since  the  head  bookkeeper  left, 
as  every  bookkeeper  who  takes  a  pride  in  his  books  would  not 
want  a  different  handwriting  on  them  neither  better  nor  worse 
than  his  own. 

If  the  head  bookkeeper  is  to  be  absent  for  a  long  or  indefinite 
period,  it  would  not  do  to  permit  the  work  on  the  main  book  to 
run  behindhand  ;  the  assistant  would  in  that  case  make  all  current 
entries,  and  for  that  reason  should  be  a  good  penman.  He  assists 
in  checking  the  posting  if  there  should  be  an  error  in  the  Trial 
Balance;  also  performs  the  duties  of  entry  clerk  and  bill  clerk,  ex- 
amines extensions  of  invoices,  goes  to  Bank  with  deposits,  also 
becomes  a  trusted  messenger  when  it  is  necessary  to  draw  money 
out  of  Bank.  Rules  the  Ledger  at  time  of  closing  it  at  the  end 
of  the  season. 

It  is  an  easy  position  to  fill  ordinarily,  as  the  assistant  would 
be  directed  in  everything  he  did  and  shown  how  to  do  it,  as  his 
superior  in  position  may  have  a  method  of  his  own,  differing 
possibly  from  the  manner  in  which  the  assistant  may  have  seen  it 
done  by  others. 

He  is  first  in  the  line  of  promotion  if  the  head  bookkeeper 
should  be  "fired,"  or  concludes  to  cross  the  St.  Lawrence  into  the 
elysian  fields  of  the  Dominion,  or  if  by  Omnipotence  he  is  re- 
quired to  ford  the  River  of  Styx, — or  better,  if  fortune  smiles 
upon  him  he  accedes  to  a  copartnership. 


124 
Dr. 


BOOKKEEPING  SIMPLIFIED. 
FIRST  NATIONAL  BANK 


In  Account 


1885. 
Jan. 

1 

R  

$2  000 

5 

R  

126 

76 

« 

5 

D  .            

323 

46 

7 

D 

496 

95 

9 

R  

300 

00 

10 

R  

100 

40 

$3  346 

87 

3,346 

87 

Feb 

1 

455 

97 

9, 

D  

369 

75 

7 

R  ,  

178 

98 

- 

9 

R  

77 

80 

9 

D  

497 

50 

1  123 

53 

1,579 

50 

Mar 

1 

Balance 

122 

°0 

On  this  side  of  the  Pass-book  is  entered  the  date  of  deposit  and  amount, 
also  amount  of  Credit  for  notes  discounted,  with  the  initial  of  the  Bank-clerk 
who  makes  the  entry,  "  R"  standing  for  Receiving-teller  and  "  D  "  for  Discount- 
clerk. 

It  will  be  seen  by  comparison  that  the  balance  brought  down  in  each  in- 
stance at  the  end  of  the  month  agrees  with  our  Balance,  as  indicated  on  stub 
of  Check-book,  on  those  dates— that  is,  the  first  of  February  and  March. 


with 


A   COMMON-SENSE   VIEW   OF   BOOKKEEPING.  125 

P.   A.   WRIGHT  &  CO.  Cr. 


$500    $300 

500     200   

470     300            .... 

500     120  90 

$2  890 

90 

Balance  

455 

97 

Eight  Vouchers  returned 

3,346 

87 

$500     $77  30 

180     200    

500         

1  457 

RO 

Balance  

122 

20 

Five  Vouchers  returned   .  • 

1,579 

50 

On  this  side  are  entered  the  amounts  of  various  checks  that  have  been  paid 
by  the  Bank  and  charged  to  our  account,  without  giving  the  dates,  on  this  book  ; 
the  order  in  which  they  are  entered  being  the  order  in  which  they  are  paid  or 
the  order  in  which  they  appear  on  the  Bank's  Ledger.  This  book  is  balanced 
by  the  Bookkeeper  for  the  Bank,  who  returns  vouchers  to  us  endorsing  on  the 
Pass-book  the  number  of  vouchers. 


126 


BOOKKEEPING   SIMPLIFIED. 


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Browning  &  Co. 
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A    COMMON-SENSE  VIEW   OF   BOOKKEEPING. 


127 


REMARKS. 

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128  BOOKKEEPING   SIMPLIFIED. 

ORDER  BOOK. 

This  book  is  used  in  a  business  where  the  demand  for  its  goods 
is  greater  than  the  supply,  or  where  goods  are  ordered  for  future 
delivery.  The  orders  are  copied  on  this  book,  from  which  it  de- 
rives its  name,  beginning  with  the  date  on  which  the  order  was 
received,  then  the  customer's  name,  address,  terms,  shipping  direc- 
tions, description  and  price  of  the  goods,  and  all  other  particulars. 

The  orders  are  numbered  on  the  book,  and  the  same  number 
marked  on  the  original  orders  with  colored  pencil,  which  are  filed 
away  for  reference.  When  the  goods  are  shipped,  the  record  is 
cancelled  on  Order  Book  and  a  direct  charge  is  made  on  Sales 
Book.  

MEMORANDUM  BOOK. 

If  goods  are  sent  out  on  approbation,  with  privilege  to  exam- 
ine and  return  part  or  all,  they  are  charged  on  this  book.  First 
is  entered  the  customer's  name  and  address,  then  the  description 
of  the  goods,  quantity  and  price,  and  shipping  directions.  A 
memorandum-bill  is  rendered,  differing  from  a  regular  bill  only 
in  the  amounts  not  being  extended.  After  a  reasonable  time  has 
elapsed,  sufficient  for  the  customer  to  examine  the  goods  and 
make  returns  of  those  not  wanted,  he  is  notified  that  unless  ad- 
vised to  the  contrary  the  goods  will  all  be  charged  to  his  account 
on  (name  the  date),  it  being  presumed  the  goods  will  all  be  re- 
tained. A  minute  should  be  made  on  Memorandum  Book  of  the 
date  notification  was  sent  out,  and  of  the  time  specified  for  charg- 
ing them  to  regular  account.  If  part  of  the  goods  are  returned, 
they  are  checked  off  memorandum  and  put  in  stock,  the  balance 
being  charged  on  Sales  Book  and  regular  bill  rendered.  The  mem- 
orandum-entry is  then  cancelled,  giving  the  folio  of  Sales  Book  on 
which  the  goods  are  charged.  If  a  customer  fails  with  goods  in 
his  possession  which  were  sent  to  him  on  memorandum,  we  can 
reclaim  them  and  prevent  them  from  being  included  in  his  effects 
and  sold  for  the  benefit  of  his  creditors,  as  the  goods  are  not  his, 
although  in  his  possession  until  he  receives  an  extended  bill  com- 
pleting the  sale  on  our  part.  All  goods  outstanding  on  Memoran- 
dum Book  must  be  included  in  our  Inventory  upon  "  taking  stock." 


A   COMMON-SENS*,   VIEW    OF   BOOKKEEPING.  129 

FILING  PAPERS. 

There  are  many  convenient  devices  for  filing  papers,  both 
temporarily  and  permanently,  each  having  some  special  merit 
peculiar  to  itself.  The  most  convenient  temporary  file  is  seen  on 
page  233,  showing  papers  filed  both  properly  and  improperly  by 
its  use.  The  wrong  way,  as  seen  in  Fig.  1,  where  the  file  goes 
through  the  middle  of  the  paper,  makes  it  difficult  to  read  that 
part  of  a  letter  without  removing  those  subsequently  filed  on  top 
of  it ;  furthermore,  it  would  cause  mutilation  of  the  paper  by  tear- 
ing it  in  pieces  in  removing  it  by  drawing  it  out,  and  would  show 
lack  of  system  and  a  lazy,  careless  bookkeeper.  The  right  way, 
as  seen  in  Fig.  2,  shows  the  letter  with  the  file  through  the  upper 
left-hand  corner,  where  there  would  be  no  writing,  making  a 
nicely  arranged  package,  indicating  that  there  was  a  man  of 
method  at  the  helm,  and  which  would  make  it  easy  to  examine  the 
whole  of  any  letter  by  turning  it  to  one  side,  even  though  it  be  in 
the  midst  of  a  file  full  of  papers,  and,  if  necessary  to  take  it  off 
the  file,  it  can  be  drawn  out  by  tearing  very  little  of  the  corner, 
without  removing  any  others,  and  preserve  the  letter  intact  and 
in  perfect  shipshape,  as  the  saying  is.  These  remarks  also  apply 
to  the  upright  file,  or  spindle,  that  sits  on  the  desk,  and  which 
should  never  be  left  standing,  especially  on  a  low  desk,  but  turned 
over  on  the  side,  as  they  are  dangerous.  The  best  way  to  file 
papers  permanently  is  by  arranging  them  alphabetically  without 
folding,  or  without  fastening  them  by  wire  driven  through  one 
side,  as  is  usually  done.  Tying  them  with  a  small  cord  answers 
the  purpose;  then  they  can  be  untied  and  retied  ad  libitum. 
The  filing  should  be  done  monthly,  and  each  package  marked 
"  Letters"  (or  Invoices,  or  whatever  it  may  be),  for  whatever 
month  it  is.  In  an  extensive  business,  a  cabinet  is  made  full  of 
compartments,  or  drawers,  one  for  each  letter  of  the  alphabet,  and 
one  for  Miscellaneous  papers,  into  which  the  letters  for  a  whole 
year  can  be  kept  and  referred  to  easily.  At  the  end  of  the  year 
they  can  be  tied  up  in  separate  packages  for  each  letter  of  the 
twenty-six  letters,  and  so  marked ;  then  placed  in  a  large  box 
marked  "  old  papers,"  with  the  year  and  the  initial  of  firm-name 
also  marked  on  the  box. 


130 


BOOKKEEPING    SIMPLIFIED. 


February  1. 
Miller  Bros. ., 5/30 

February  5. 
W.  C.  Browning » n/30 

February  7. 
Miller  Bros 5/30 

February  8. 
Davis  &  Co. .  .  .n/30 


February  9. 


J.  C.  Brown  &  Co. 


,n/30 


February  10. 
Miller  Bros n/30 

March  1. 
Miller  Bros .5/80 

March  2. 

Wm.  French n/30 

Wm.  Ward n/30 

James  Elston .n/30 

March  3. 
L.  Powell n/30 


$134 


24 


76 


37 


13 


190 

18 
18 
15 

31 


85 


00 


80 


00 


00 


40 


80 


Paid,  1/3 


Paid,  1/10 


Paid,  1/10 


Paid,  1/9 


Received 
Note,  1/10 


Paid,  1/31 


Paid,  1/31 


ACCOUNTS   RECEIVABLE   BOOK. 

The  figures  1/3  on  the  right  of  this  page  indicate  the  month 
and  day  when  bill  was  paid. 

The  month  should  never  be  written  numerically,  however, 
unless  the  space  is  too  small  to  write  it  otherwise.  It  is  never 
admissible  to  date  a  letter  that  way^  as  is  often  done.  It  shows 
laziness  and  bad  taste  on  the  part  of  the  writer. 


A   COMMON-SENSE  VIEW   OF   BOOKKEEPING. 


131 


ANNUAL  STATEMENT  FROM  SINGLE  ENTRY 

BOOKS. 


Accounts  Receivable, 

Bills  Receivable, 

Cash, 

Mdse.  (Inventory), 

Office  Furniture, 


Accounts  Payable, 

Bills  Payable, 

The  firm'  s  present  net  capital,* 


ASSETS. 

$1382.35 

100.00 

155.50 

7300.00 

245.00  $9182.85 
LIABILITIES. 

$6165.35 

500.00    6665.35 

$2517.50    2517.50 


P.  A.  W.'s  original  investment,  1000.00 

Additional  investment  and   interest 

thereon,  503.33    1503.33 

Withdrawn  during  the  year,  50.00 

1453.33 


T.  P.  N.'s  original  investment,  1000.00 

Withdrawn  during  the  year,  50.00 

Remainder  of  the  firm's  investment, 
Net  Gain, 

P.  A.  W.'s  remaining  investment  and 

interest  thereon,  1453.33 

Half  of  net  gain,  57.09 

His  present  net  capital, 


950.00 
$2403.33   2403.33 
$114.17 


T.  P.  K.'s  remaining  original  capital, 
Half  of  net  gain, 
His  present  net  capital, 
P.  A.  W.'s  and  T.  P.  K's  joint  capital 
(see  firm's  capital  above),* 


$1510.42   1510.42 

950.00 

57.08 


$1007.08   1007.08 


$2517.50    2517.50 


This  statement  is  made  according  to  the  FOURTEEN  RULES  on 
pages  46  and  47,  and  from  it  the  books  could  be  changed  to 
double  entry  according  to  the  form  of  entry  on  page  48. 


132  BOOKKEEPING   SIMPLIFIED. 

COMMERCIAL   CORRESPONDENCE. 

Business  letters  should  be  brief  and  decisive,  but  clear  and 
courteous.  The  following  forms  will  give  the  inexperienced 
reader  a  general  idea  how  to  word  a  letter  on  similar  occasions. 
Every  business  letter  is  entitled  to  the  courtesy  of  a  prompt 
acknowledgement.  In  writing  for  information  inclose  stamps 
for  a  reply.  Ladies  should  prefix  Miss  or  MRS.  to  their  name 
when  writing  to  strangers. 


A  LETTER  REQUESTING  NOTE  TO  BALANCE  ACCOUNT. 

MEMORANDUM. 

NEW  YORK,  Jan.  31,  1885. 


From 


P.  A.  WRIGHT  &  Co., 


769  Broadway. 


To 


MESSRS.  J.  C.  BROWN  &  Co., 
Chicago,  111. 


DEAR  SIRS:  Enclosed  herewith  we  hand  you  statement  of 
your  account,  which  you  will  doubtless  find  correct.  If  not  con- 
trary to  your  custom  of  doing  business,  please  send  us  your  note 
at  60  days  from  average  date,  for  the  amount,  $31 S^0^-,  and 
greatly  oblige  Yours  truly, 

P.  A.  WRIGHT  &  Co. 


A  LETTER  TO  BANK  CASHIER  ENCLOSING  DRAFT  FOR 
COLLECTION. 


From 


MEMORANDUM. 

NEW  YORK,  Jan.  31,  1885. 


P.  A.  WRIGHT  &  Co., 


769  Broadway. 


To 


CASHIER  IST  NAT'L  BANK, 


Detroit,  Mich. 


DEAR  SIR:  We  enclose  herewith  for  collection  our  sight 
draft  on  Messrs.  W.  C.  Browning  &  Co.,  for  $24^.  PROTEST 
WAIVED.  Your  kind  and  prompt  attention  will  oblige 

Yours  truly, 

P.  A.  WRIGHT  &  Co. 


A    COMMON-SENSE  VIEW   OF  BOOKKEEPING.  133 

A  LETTER  NOTIFYING  W.  C.  BROWNING  &  CO.  OP  DRAFT. 

MEMORANDUM. 

NEW  YORK,  Jan.  31,  1885. 


From 


P.  A.  WRIGHT  &  Co., 

769  Broadway. 


To 

MESSRS.  W.  C.  BROWNING  &  Co. , 
Detroit,  Mich. 


DEAR  Sms:  We  have  this  day  drawn  on  you  at  sight,  through 
First  National  Bank,  Detroit,  for  $24^°^,  as  per  statement  en- 
closed. Please  honor  draft  on  presentation,  and  much  oblige 

Yours  truly, 

P.  A.  WEIGHT  &  Co. 


A  LETTER  ACKNOWLEDGING  RECEIPT  OF  REMITTANCE 
AND  ORDER. 


MEMORANDUM. 


From 


P.  A.  WRIGHT  &  Co., 

769  Broadway. 


To 


NEW  YORK,  Jan.  31,  1885. 


MESSRS.  MILLER  &  BROS., 

St.  Louis. 


DEAR  Sms :  Your  valued  favor  of  5th  inst.,  inclosing  check 
for  llTSy9^,  is  received.  We  have  placed  the  amount  at  your 
credit  and  note  order,  which  will  be  executed  as  promptly  as  pos- 
sible, with  our  best  care  and  attention.  Accept  our  thanks. 

Yours  truly, 

P.  A.  WEIGHT  &  Co. 


From 


A  LETTER  DECLINING  TO  ACCEPT  SIGHT  DRAFT. 

MEMORANDUM. 

NEW  YORK,  Jan.  31,  1885. 


P.  A.  WRIGHT  &  Co., 

769  Broadway. 


To 

MESSRS.  E.  H.  E.  WRIGHT  &  Co. , 
Evansville,  lud. 


134  BOOKKEEPING   SIMPLIFIED. 

GENTLEMEN:  Your  esteemed  favor  of  6th  inst.  is  duly  re- 
ceived. In  reply  to  which,  permit  us  to  say  it  will  not  be  con- 
venient for  us  to  meet  your  sight  draft  for  $500-^^,  owing  to 
non-receipt  of  money  due  us.  It  will  be  our  pleasure,  however, 
to  honor  your  draft  at  five  days'  sight  for  that  amount,  which  we 
trust  will  be  satisfactory  to  you.  In  the  mean  time  we  beg  to 
remain,  Yours  truly, 

P.  A.  WEIGHT  &  Co. 


A  LETTER  ACCOMPANYING  OFFERING  FOR  DISCOUNT. 

MEMORANDUM. 

NEW  YORK,  Jan.  31,  1885. 


From 


P.  A.  WRIGHT  &  Co., 


769  Broadway. 


To 


CASHIER  IST  NAT'L  BANK, 


City. 


DEAR  SIR:  "We  respectfully  offer  herewith  for  discount,  and 
credit  of  our  account,  the  following  described  notes,  viz.: 

J.  C.  Brown  &  Co. . .   Chicago.  .Mar.  5, 1885,  .$131.76 

W.  C.  Browning  &  Co.  .Detroit . . .  Apl.  4,  1885 . .  $195.85..$327.61 

If  acceptable,  please  pass  the  same  to  our  credit,  less  discount, 
and  oblige  Yours  truly, 

P.  A.  WRIGHT  &  Co. 


Form  usually  printed  on  bottom  of  Statement  Blanks  and  filled  out  to  suit 
the  occasion,  the  appearance  of  which  on  bottom  of  statement  without 
being  filled  out  is  often  quite  sufficient,  as  it  is  an  evidence  that  such  a 
one  would  likely  follow. 


DEAR  SIRS  :  Above  please  find  statement  of  your  account, 
which  you  will  doubtless  find  correct ;  unless  we  receive  your  re- 
mittance by  return  mail,  we  will  draw  on  you at  sight, 

for  $ ,  amount  of  past-due  bills,  according  to  terms  on  bills 

rendered.  P.  A.  WRIGHT  &  Co. 


A    COMMON-SENSE   VIEW   OF   BOOKKEEPING.  135 

A  LETTER  INVESTIGATING  REFERENCE. 

NEW  YORK,  Jan 'y.  1st,  1888. 
Mr.  A.  M.  Warner,  Boston,  Mass. 

DEAR  SIR  : — Having  been  referred  to  you  by  Mr.  G.  B.  Allen 
of  your  city,  with  whom  we  expect  to  have  some  business  deal- 
ings, we  request  that  you  will  kindly  furnish  us  with  any  in- 
formation you  may  possess  concerning  his  responsibility,  relia- 
bility, and  general  business  qualifications.  We  will  regard  such 
information  as  confidential,  and  be  pleased  to  reciprocate  the 
favor  if  the  opportunity  presents  itself. 

Yours  truly,  "  P.  A.  WRIGHT  &  Co. 

A  LETTER  OF  APPLICATION  FOR  A  POSITION. 

NEW  YORK,  Jan.  1st,  1888. 

A.  D. 

Will  please  consider  me  as  an  applicant  for  the  position  ad- 
vertised in  the  Herald  of  this  inst.  I  am  thirty-four  years  old, 
and  have  had  twelve  years  experience  as  head  book-keeper  and 
cashier  in  first  class  New  York  houses  ;  therefore  feel  equal  to 
any  emergency  in  accounting,  and  capable  of  assuming  entire 
charge  of  the  affairs  of  your  office  and  conducting  them  to  your 
infinite  satisfaction.  The  question  of  salary  can  be  settled  .ac- 
cording to  your  estimation  of  my  ability  after  a  fair  trial.  I 
am  perfectly  abstemious  ;  in  fact,  have  no  objectionable  habits. 
Satisfactory  reference  as  to  honesty  and  reliability  will  be 
furnished  at  interview,  if  you  are  pleased  to  accord  me  one. 
Yours  obediently,  P.  A.  WRIGHT. 

ULTIMATUM  WITH  DELINQUENT  CUSTOMER. 

Mr.  Wm.  Smith. 

DEAR  SIR  : — Our  draft  on  you  for  past-due  account  has  been 
returned,  accompanied  by  no  explanation  from  you  as  to  why 
you  failed  to  honor  it.  Unless  we  receive  your  remittance  by 
return  mail,  we  will  place  the  matter  in  the  hands  of  our  at- 
torney, with  instruction  to  bring  suit  for  the  amount,  without 
delay.  By  giving  this  your  immediate  attention,  you  will  save 
further  trouble  and  expense. 

Yours  truly,  P.  A.  WRIGHT  &  Co. 

LETTER  TO  ATTORNEY. 

NEW  YORK,  Jan.  3d,  1888. 
M-  P-  Stafford,  Esq.,  Attorney '-at- Law. 

DEAR  SIR  : — We  enclose  herewith,  for  collection,  a  statement 


136  BOOKKEEPING    SIMPLIFIED. 

of  our  account  against  Wm.  Smith.  If  not  paid  promptly,  on 
presentation,  you  will  please  institute  suit  against  him,  and  ob- 
tain judgment  for  the  amount  and  cost.  Your  prompt  attention 
will  oblige, 

Yours  truly,  P.  A.  WEIGHT  &  Co. 

ACKNOWLEDGMENT  OF  ORDER. 

HEW  YORK,  Jan.  1st,  1888. 
Mr.  R.  V.  Johnson. 

DEAR  SIK  : — Your  order  was  duly  received  and  appreciated  ; 
but  having  been  mislaid  through  clerical  carelessness,  it  has 
failed  to  receive  the  prompt  acknowledgment  and  attention  it 
otherwise  would  have  had.  We  hope  the  delay  has  caused 
you  no  serious  inconvenience  or  loss,  and  promise  that  it  shall 
not  occur  again,  if  you  should  be  pleased  to  favor  us  with  fur- 
ther orders. 

Yours  truly,  P.  A.  WEIGHT  &  Co. 

A  LETTER  OF  INTRODUCTION. 

EVANSVILLE,  IND.,  June  17th,  1873. 
Messrs.  H.  W.  Rogers,  Jr.,  <$  Bro.,  Chicago,  fil. 

GENTLEMEN  : — Permit  me  to  introduce  to  your  acquaintance, 
Mr.  P.  A.  Wright  of  this  place,  who  visits  your  city  for  the 
purpose  of  seeking  employment  as  book-keeper.  You  will  find 
him  perfectly  reliable,  competent,  and  trustworthy :  and  I  would 
deem  it  a  special  personal  favor  if  you  would  take  a  little  interest 
in  doing  something  for  him.  You  can  recommend  him  fully 
for  any  position  in  which  he  will  offer  hip? self. 

Yours  respectfully,  H.  O.  BABCOCK. 

Letters  of  introduction  must  not  be  sealed,  and  on  tbe  envelope  must  be 
written  in  the  lower  left  hand  corner,  "  Introducing  Mr. ." 


A  LETTER  OF  RECOMMENDATION. 

EVANSVILLE,  IND.,  May  21st,  1873. 
To  tuhom  it  may  concern  : 

The  bearer,  P.  A.  Wright,  of  this  city,  we  have  had 
business  associations  with  for  several  years  ;  and  know  that,  as 
an  accountant,  he  has  good  ability  and  writes  a  good  clear  hand. 
Habits  good.  We  feel  satisfied  that  he  would  be  regarded  with 
favor  in  any  commercial  firm  giving  him  employment.  Our 
acquaintance  with  the  young  gentleman  has  been  of  such  a 
character  as  to  commend  him  to  our  notice  ;  and  without  hesi- 
tancy we  recommend  him  to  any  firm  in  Chicago  or  elsewhere. 
Yery  respectfully,  CHARLES  YIELE  &  Co. 


A    COMMON-SENSE   VIEW    OF   BOOKKEEPING.  137 

FORM  OF  PROMISSORY  NOTE. 

CHICAGO,  ILL.,  Jan.  1/1885 

Sixty  days  after  date  we  promise  to  pay  to  the  order  of  P.  A. 
Wright  &  Co.,  One  Hundred,  Thirty-one,  and  ^  Dollars. 
Payable  at  our  office,  with  exchange  on  New  York. 

Yalue  received. 

J.  C.  BROWN  &  Co. 


FORM  OF  SIGHT  DRAFT.* 

NEW  YORK,  Jan.  31,  1885. 

At  Sight  pay  to  the  order  of  Cashier  of  First  National  Bank, 
Detroit,  Twenty-four  -ffa  Dollars,  value  received,  and  charge 
same  to  account  of  P.  A.  WRIGHT  &  Co. 

Io 

MESSRS.  W.  C.  BROWNING  &  Co. , 

Detroit,  Mich. 


FORM  OF  ACCEPTANCE. 

$500^.  EVANSVILLE,  IND.,  Feb.  1,  1885. 

At  five  days'  sight,  pay  to  the  order  of  ourselves  five  hundred 
dollars,  value  received,  and  charge  to  account  of 

To  E.  H.  E.  WRIGHT  &  Co. 

MESSRS.  P.  A.  WRIGHT  &  Co. , 

769  Broadway,  New  York. 


The  following  is  written  across  face  of  the  above  form,  in 
red  ink:  "Accepted,  Feb.  3,  '85,  payable  at  First  National 
Bank.  P.  A.  WRIGHT  &Co." 


*Time  draft  differs  from  this  only  in  having  the  time  to  run  specified. 


138  BOOKKEEPING   SIMPLIFIED. 

FORM  OF  A  RECEIPT- 

NEW  YORK,  Jan.  31,  1885. 

Keceived   of   Miller   &   Bros,   sixty    dollars,    in    full   of    all 
demands.  P.  A.  WEIGHT  &  Co. 


FORM  OF  DUE  BILL. 


Dae  on  demand,  to  Austin  Koss  or  order,  seventy-five  dollars,, 
value  received.     New  York,  Jan.  31,  1885. 
$75T°¥V  P.  A.  WRIGHT  &  Co. 


"I.  O.  U.» 


A  paper  having  on  it  the  capitals  I.  O.  IT.,  with  amount 
stated,  signed  and  dated,  constitutes  another  form  of  due  bill 
used  for  small  sums  and  short  time,  as  a  rule  called  an  I.  O.  U. 


FORM  OF  CERTIFICATE  OF  DEPOSIT. 

$100^.  NEW  YORK,  Jan.  31,  1885. 

P.  A.  Wright  &  Co,  have  deposited  in  this  bank  one  hundred 
dollars,  payable  to  the  order  of  Austin  Ross,  on  the  return  of 
this  certificate  properly  indorsed. 

JEREMIAH  BEHM,   Cashier.* 


*Form  of  exchange  is  not  given,  as  it  is  a  class  of  paper  peculiar  to  banks, 
and  bookkeepers  are  never  required  to  make  out  a  bill  of  exchange. 


A   COMMON-SENSE   VIEW    OF   BOOKKEEPING.  139 

FORM  OF  MONTHLY  STATEMENT. 

MONTHLY  STATEMENT. 

NEW  YORK,  March  1,  1885. 
MESSES.  J.  C.  BROWN  &  CO.,  Chicago,  111., 

In  account  with 

P.  A.  WRIGHT  &  CO., 

769  Broadway. 


1885. 
Jan 

1 

To  Mdse  as  per  bill  rendered  ....    4/60 

$137 

9!5 

9 
9 

"       "       '•    "     "          "        n/30 
"      "      "    "     "         "        4/60 

13 

88 

00 
25 

23 

189 

30 

Jan 

24 

On. 
By  Cash  on  a/c        

100 

00 

$427 

80 

94 

<*      «     i«     K 

75 

00 

31 

«      «     «     <« 

50 

00 

225 

00 

Balance  

$202 

80 

INVOICE  OR  BILL. 


Terms:  4$,  60  days. 

Bills  not  paid  at  Maturity  subject  to  Sight  Draft. 
Book,  A.    Folio,  1.    Salesman,  Ross. 
Shipping  Directions,  M.  D. 


769  Broadway, 
NEW  YORK,  Jan.  1,  1885. 


MESSES.  J.  C.  BROWN  &  CO.,  Chicago,  111., 

Bought  of  P.  A.  WRIGHT  &  CO., 

DEALERS  IN 

SHIRTS,  COLLARS  AND  CUFFS. 


94 

Doz.  No.  1  Shirts  ®$10  00 

$25 

00 

B1 

"    2      "                              '    11  00 

33 

00 

9, 

"3      "       '1200 

24 

00 

1 

"4      "     

13 

00 

| 

"    5      "             .    .        .     '    14  00 

7 

00 

10 

Collars  '      1  60 

16 

00 

5 

Cuffs                                      '      3  60 

18 

00 

Case  and  cartage 

1 

25 

$137 

25 

140  BOOKKEEPING   SIMPLIFIED. 


MERCANTILE    CALCULATIONS. 

It  does  not  follow  that  one  must  have  sounded  the  depths  of 
mathematics  before  he  can  become  a  bookkeeper.  A  common- 
school  education,  and  therefore  familiarity  with  the  four  princi- 
pal rules  of  arithmetic  (addition,  subtraction,  multiplication,  and 
division),  common  fractions,  simple  interest,  discount,  and  equation 
of  payments,  is  all  that  is  necessary.  In  fact,  the  old-time 
qualifications  of  "  read,  write,  and  cipher"  are  the  fundamental 
principles  of  a  business  education.  A  few  examples  and  short 
rules  are  given  by  way  of  refreshing  the  student's  memory,  it 
being  presupposed  that  he  is  already  conversant  with  all  the  above 
principles,  for  a  better  understanding  of  which  he  is  referred  to 
works  on  mathematics. 


PERCENTAGE. 

To  get  10$  of  any  amount,  remove  decimal  point  one  place  to 
the  left. 

To  get  5$,  remove  decimal  point  one  place  to  the  left  and  divide 
by  2. 

To  get  1$,  remove  decimal  point  two  places  to  left. 

To  get  any  other  percentage,  remove  decimal  point  two  places 
to  the  left  and  multiply  by  the  given  rate. 


MULTIPLICATION. 

The  shortest  method  of  multiplying  any  amount  by  any  num- 
ber less  than  100  is  to  annex  two  ciphers  and  take  aliquot  parts. 

EXAMPLE  1.  Multiply  436  by  62|  : 

2)43600 
4)21800 
5450 
27250  (Answer). 


A   COMMON-SENSE   VIEW    OF   BOOKKEEPING. 

Demonstration. 

436  multiplied  by  100  =  43600; 

436  50  =  21800  (half  as  much); 

436     "      12i  =  5450  (i  of  50); 

436     "      62|  =  27250  (50  and  12i  added). 


141 


EXAMPLE  2.  Multiply  738  by 

4)73800 

2)18450 

9225 


27675  (Answer). 
Demonstration. 

738  multiplied  by  100    =  73800; 


738 
738 

738 


25    =  18450  (one  quarter  as  much); 
12|  =    9225  (half  of  one  quarter): 

37|  =  27675  (25  and  12£  added). 


EXAMPLE  3.  Multiply  973^  by  67i  : 

2)97350.00 

4)48675.00 

12168.75 

10)4867.50 

65Y11.J  (Answer). 
Demonstration. 

Express  the  fraction  in  multiplicand  decimally. 
973.50  multiplied  by  100    =  97350.00 


973.50 
973.50 
973.50 


50    =  48675.00  (half  as  much); 
12|  =  1 21 68. 75  (i  of  50); 
5    =    4867. 50  (TV  of  50); 


973.50  "  67i  =  65711.25  (50,  12|,  and  5  addedX 

Restore  the  decimal  to  common  fraction  T2^  =  £. 

EXAMPLE  4.  Multiply  769  by  95  : 

769.00  as  multiplied  by  100 
38.45         "          "  5 


Answer — 730.55 


95 


143  BOOKKEEPING   SIMPLIFIED. 


EXAMPLE  5.  Multiply  769  by 

76900  X  3  =  230700 
76900  -7-  3  =    25633£ 

205066| 

Demonstration.  Annexing  two  ciphers  to  any  amount  multi- 
plies it  by  100.  It  will  be  perceived  that  266f  is  33-J,  or  one 
third  less  than  300  ;  hence,  by  annexing  two  ciphers  and  first 
multiplying  by  3,  then  dividing  same  amount  by  3,  the  difference 
between  the  two  results  thus  obtained  gives  the  answer.  It  re- 
quires many  less  figures  by  this  simple  operation  than  by  the 
usual  method  of  multiplication. 


CANCELLATION. 

It  is  the  fewest  number  of  persons  who,  after  learning  this 
beautiful  operation  as  school-boys,  give  it  any  practical  applica- 
tion in  after-life  to  the  many  problems  that  can  be  solved  by  it 
quicker  than  by  any  other,  requiring  the  fewest  figures,  and  pro- 
ducing the  most  accurate  result. 

The  principle  is  to  draw  a  perpendicular  line  and  place  the 
principal  and  all  multipliers  on  the  right  of  the  line  thus  drawn 
and  all  divisors  on  the  left,  first  reducing  both  multipliers  and 
divisors  to  a  common  denomination.  Then  strike  out  on  both 
sides  of  the  line  any  amount  that  can  be  divided  without  a  re- 
mainder by  a  common  factor,  then  multiply  all  the  remaining 
numbers  together  on  the  right  and  divide  their  product  by  the 
product  of  all  the  remaining  numbers  on  the  left;  the  quotient 
thus  obtained  will  be  the  answer. 

EXAMPLE  1.  What  will  be  the  interest  on  $424  at  6%  for  2 
yrs.  2  mos.  15  days  ? 
106 


m     159  X  106  =  168.54  +  3  =  56.18 

Answer— $56.18. 
Demonstration.    2  yrs.  2  mos.  15  days  are  equal  to  795  days. 
Multiplying  $424  by  Q%  would  give  the  interest  for  one  year,  or 


A    COMMON-SENSE    VIEW    OF   BOOKKEEPING. 


143 


360  days.  To  get  the  interest  for  one  day  we  divide  by  12  X  30, 
which  is  equal  to  360.  Then  to  get  it  for  the  required  time 
multiply  by  795,  the  number  of  days  in  that  time. 

EXAMPLE  2.  If  a  piece  of  cloth  containing  60  yards  cost  $34, 
what  would  be  the  selling  price  per  yard  in  order  to  make  20 
percent?  Answer — 68  cents. 

Demonstration. 

34 


EXAMALE  3.  If  I 

the  cost  per  gross  ? 

Demonstra  tion. 


00 


2  X  34  =  68 
sell  a  hat  for  $4.50,  making  20^,  what  was 
Answer,  $540. 

450 

IM  =  12 

=  10  X  12  X  450  =  540 


RULE  FOR  REDUCING  FRENCH  MONEY— FRANCS— TO  U.  S. 

CURRENCY. 

Multiply  francs  and  fractions  thereof  by  the  decimal  .193,  one 
franc  being  equal  to  19^-  cents.  Point  off  three  places  in  the 
product  (five  places  if  there  are  fractional  francs),  and  that  will 
give  the  answer  in  dollars  and  cents. 


RULE  FOR  REDUCING  GERMAN  MONEY— MARKS— TO  U.  S. 

CURRENCY. 

Multiply  the  given  amount  in  marks  by  the  decimal  .238,  one 
mark  being  equal  to  23T8¥  cents.  Point  off  three  places  in  the 
product :  that  will  give  the  answer  in  dollars  and  cents. 


RULE   FOR  REDUCING   STERLING   TO   U.  S.   CURRENCY. 

The  exchange  value  of  <£!  is  assumed  to  be  $4.87  for  all  or- 
dinary mercantile  purposes,  such  as  crediting  invoices,  approxi- 
mating cost,  etc. 


144  BOOKKEEPING   SIMPLIFIED. 

At  this  rate  we  multiply  the  given  £'s  by  $4,  multiply  shillings- 
by  20  cents,  and  take  aliquot  parts  for  the  pence,  to  the  total 
amount  of  which  we  add  one  fifth  thereof,  and  one  twelfth  of  one 
fifth  the  sum  total  will  be  the  answer. 

In  the  first  place  we  assume  £1  to  be  equal  to  $4,  at  which  rate 
one  shilling,  which  is  one  twentieth  of  £1,  would  be  equal  to  20 
cents,  which  is  one  twentieth  of  $4.  Therefore  five  shillings  and 
over,  if  multiplied  by  20  cents,  wrould  give  the  answer  in  dollars 
and  cents,  four  shillings  and  under  in  cents  only.  Having  ob- 
tained the  value  of  the  given  £  s.  d.  at  the  rate  of  $4,  to  get  it  at 
$4.87  we  add  one  fifth  of  the  amount  at  $4,  which  would  give 
the  value  at  $4.80  (80  cents  being  one  fifth  of  $4) ;  then  add  one 
twelfth  of  one  fifth  of  $4,  which  would  give  the  value  at  $4.87 ;. 
one  twelfth  of  80,  which  represents  one  fifth,  being  in  whole  num- 
bers 7,  which  is  the  nearest  we  can  get  it  by  this  operation. 

EXAMPLE.  What  is  the  value  of  £7  9s.  6d.  in  currency  ? 

£7    9s.  Qd. 
420 


value  of  £7  at  $4.00 

1.80  "  9s.         "     4.00  per  £ 

10  "  6d.  "     4.00     " 


5)29.90  "      £7    9s.  6d.  "     4.00     " 

12)  5.98  "         7    9     6     "       .80     " 

49  «        7    9     6     "       .07     « 


Answer,  $36.37  "        796"  $4.87 


SHORTEST  KNOWN  RULES  FOR  COMPUTING  INTEREST,  ANY 
RATE  FOR  ANY  GIVEN  TIME  ON  ANY  GIVEN  AMOUNT. 

CASE  1.  To  find  the  interest  at  6$  for  30  days  on  any  amount. 

Rule  1.  Divide  the  amount  in  dollars  by  two,  and  that  will 
give  the  interest  in  cents. 

CASE.  2.  To  find  the  interest  at  7$  on  any  amount  for  any  num- 
ber of  days. 

Rule  2.  Proceed  according  to  Kule  1  and  add  one-sixth  of  the 
result.  Deduct  one-sixth  to  find  the  interest  at  5$.  Any  other 


A   COMMON-SENSE  VIEW   OF  BOOKKEEPING.  145 

percentage  may  be  found  by  adding  or  subtracting  as  the  case 
may  require. 

CASE  3.  When  the  time  is  in  years,  months,  and  days,  reduce 
the  time  to  days,  and  proceed  as  in  Rule  2  and  take  aliquot  parts 
for  the  fractional  part  of  30  days. 

CASE  4.  Any  amount  will  show  upon  its  face  the  interest  there- 
on at  6$  for  60  days,  by  removing  the  decimal  point  two  places  to 

the  left. 

All  Interest  rules  are  made  on  a  basis  of  360  days  to  the  year,  when  in  fact 
there  are  365  days  in  a  year;  hence  in  business  we  never  figure  Interest  by  the 
month  nor  by  the  year,  but  always  by  the  days.  In  school  we  were  taught  thr.t 
the  Interest  on  $500  for  one  year  (from  Jan.  1st  to  Dec.  31st,  365  days)  @,  6$ 
was  $30,  when  in  business  we  know  it  is  $30.42.  Always  count  the  actual 
number  of  days  intervening  between  two  given  dates.  This  is  another  in- 
stance in  which  theoretical  or  school  methods  differ  from  practical  methods. 


AVERAGING    ACCOUNTS. 

Fixing  a  date  upon  which  a  number  of  amounts  occurring  on 
different  dates  and  having  different  time  to  run  before  maturity- 
would  amount  to  same  thing  as  if  the  sum  total  of  all  the  amounts 
had  occurred  on  one  date. 

CASE  1.  When  the  account  contains  debits  only,  with  equal 
time  to  run. 

Rule  1.  Multiply  the  amount  of  first  bill  by  the  number  of 
days  intervening  between  first  and  second  bill ;  add  the  two  bills- 
together,  and  multiply  the  amount  by  the  number  of  days  between 
second  and  third  bill ;  add  the  three  bills  together,  and  multiply 
the  amount  by  the  number  of  days  between  third  and  fourth  bills, 
and  so  on  to  the  end  of  the  account.  Divide  the  total  amount  of 
products  thus  obtained  by  the  total  amount  of  bills,  and  the  quo- 
tient arising  will  show  the  number  of  days  back  of  date  of  last 
bill,  which  will  give  the  average  date  of  the  account. 

EXAMPLE.  What  is  the  average  date  of  the  following  account  ? 

January    3,  $40,  4  mos.; 
5,     20,       « 
9,     TO,       « 
17,     30,       « 

10 

$160 


146  BOOKKEEPING   SIMPLIFIED. 

Demonstration. 

40  X  2  =      80 

60  X  4  =    240 

130  X  8  =  1040 


160)1360(81  days  back  of  Jan.  17,  considering  the  % 
1280       d.  is  Jan.  8th  (or  9th)  for  average  pur- 

chase    date,    and   the   average   due  date 

80       May  8th  or  9th. 

CASE  2.  When  an  account  contains  both  debits  and  credits  of 
different  dates  and  unequal  time  to  run,  and  it  is  desired  to  know 
when  the  balance  will  average  due. 

Mule  2.  Find  the  due  date  of  each  bill  by  extending  it  full 
time  it  has  to  run.  Then  find  the  average  date  of  the  debits  and 
the  average  date  of  credits,  according  to  Rule  1,  Case  1.  Com- 
pute the  interest  on  total  amount  of  debits  and  credits  separately 
at  12$  per  annum  from  the  first  of  the  month  on  which  the  first 
transaction  matures  to  their  respective  average  date.  Divide  the 
difference  in  interest  thus  obtained  by  the  balance  of  the  account ; 
the  quotient  will  be  the  number  of  months  from  the  first  of  the 
month  on  which  the  first  transaction  matures  or  the  date  on  which 
the  balance  is  due.  If  the  balance  of  interest  and  balance  of  ac- 
count are  on  opposite  sides, — that  is,  the  interest  on  the  smaller 
side  of  the  account  be  greater  than  the  interest  on  the  larger  side, 
— the  time  will  be  reckoned  back  of  first  day  of  the  month  on 
which  first  transaction  matures. 

EXAMPLE.  When  will  the  balance  of  the  following  account  be 
due? 


Dr. 

January  3,  30  days $30 

8,  60     "   25 

13,90      "   20 

18,    4  mos 75 

$150 


Or. 

February  5 $25 

March  2 40 

Aprils 35 

Balance 50 

$150 


A   COMMON-SENSE  VIEW   OF  BOOKKEEPING.  147 

Demonstration. 

Bill  January  3  would  be  due  February  2; 
"  8  "       March  9 ; 

"          "       13       "         "       April  13 ; 
"          "       18       "         "       May  18. 

February  2,  30         X  35  (No.  of  days  between  Feb.  2  and  March  9)  =  1050 
March  9,       25—55  X  35  (  "  "  Mar.  9  and  April  13)  =  1925 

April  13,       20—75  X  35  (  "  "  April  13  and  May  18)  =  2625 

May  18,       _75  5600 

150)5600(38  days  back  of  May  18  =  April  10  or  average  date  of 
450  debits. 

1100 
1200 

February  5,  25         X  25  (No.  of  days  bet.  first  and  second  payment)  =    625 
March  2,       40—65  X  32  (      "  "         second  and  third         "       )  =  2080 

April  3,       _35  2705 

100)2705(27  days  back  of  April  3  =  March  7  or  average  date  of  pay- 
200  ments. 

705 
700 


Interest  on  $150  from  February  1  to  April  10  @  12$  (69  days)  =  345 
100          "  "    1      March  7      "      (35  days)  =  116 

Balance  of  a/c  $50  Difference  in  interest,  229 

229  -T-  50  =  4f  months,  or  4  mos.  18  days. 

4  mos.  and  IS  days  from  February  1st  is  June  18th — average  due  date  of 
balance. 


WONDERS    OF    MATHEMATICS. 

An  interesting  problem  for  two — say  A  and  B. 

First  proposition  is  for  A  to  put  down  three  amounts  in  the 
order  of  addition  containing  any  number  of  figures,  under  which 
B  will  write  two  more  amounts  containing  same  number  of 
figures. 

Second  proposition  :  B  will  write  the  answer  or  sum  total  of  the 
five  amounts  thus  written  after  seeing  A's  first  amount  and  before 


148  BOOKKEEPING   SIMPLIFIED. 

any  other  figures  are  made,  thus :  Assuming  the  first  line  A  puts 

down  to  be 

7690 


27688 

omit  four  lines  for  next  four  amounts,  and   B  will  write  the 
answer  27688. 

Demonstration. 

A's  first  line 

"   second  line 

"    third  line 
B's  first  line 

"   second  line 

27688     B's  Answer. 

The  result  can  be  ascertained  for  any  sum  containing  an  odd 
number  of  amounts  on  the  same  principle. 

The  above  being  designed  more  to  amuse  than  to  instruct,  the 
explanation  is  omitted  to  give  the  reader  an  opportunity  of  exer- 
cising a  little  thought  and  mathematical  skill  to  arrive  at  the 
proper  solution.  Those  who  cannot  do  it,  if  sufficiently  inter- 
ested, can  write  the  author,  who  will  take  pleasure  in  furnishing 
a  key  to  the  solution  and  give  a  reason  therefor. 


SOMETHING   EASY. 

Select  any  figure,  multiply  it  by  9,  then  multiply  12,345,679 
by  the  product,  and  the  new  product  or  result  thus  obtained  will 
contain  nine  of  the  figures  first  selected. 

Demonstration.  Suppose  8  be  selected, 

8  X  9  ='  72  12,345,679 

72 


24,691,358 
86,419,753 

888,888,888 


BOOKKEEPING   SIMPLIFIED.  149 


PRESS-COPYING. 

This  very  useful  and  great  time-  and  labor-saving  process  con- 
sists in  reproducing  a  manuscript  quickly  and  exactly  by  taking 
an  impression  in  a  book  of  manilla  paper  of  very  fine  texture. 
A  set  of  blotters  and  oil-sheets  accompany  every  book,  the  former 
being  used  in  producing  the  copy,  and  the  latter  to  place  between 
the  copies  when  made  to  prevent  blurring  or  blending  of  one 
with  the  other  while  the  paper  is  still  damp,  making  them  illegi- 
ble. 

The  process  is  to  place  a  blotter,  same  size  as  the  leaf  on  which 
the  transfer  is  to  be  made,  beneath  the  leaf,  which  is  then  damp- 
ened with  a  soft  brush  (some  use  a  rag  or  sponge,  but  a  brush  is 
better,  and  was  originally  used  with  the  invention),  after  which 
another  blotter  of  the  same  size  is  placed  on  the  dampened  leaf 
and  borne  down  with  sufficient  pressure  to  absorbe  all  superflu- 
ous water  that  is  left  after  the  sheet  is  thoroughly  moistened  ;  then 
the  top  blotter  is  removed  and  the  manuscript  placed  on  the  damp 
surface  with  the  written  side  downward,  the  blotter  is  replaced 
over  it,  and  the  book  is  closed  and  placed  in  the  press,  which  should 
always  be  left  ready  to  receive  it.  -Turn  the  wheel  or  bar  as  far 
as  it  will  go,  then  reverse  it  immediately,  and  you  will  have  a  per- 
fect copy.  It  is  not  at  all  necessary  to  allow  the  book  to  remain 
in  the  press  longer  than  an  instant,  unless  the  manuscript  has 
been  written  over  an  hour,  as  the  copy  is  completed  just  as  soon 
as  the  writing  is  brought  in  contact  with  the  moistened  surface, 
providing  copying-ink  has  been  used,  ordinary  writing-fluid  not 
copying  at  all. 

Many  people  first  place  the  oil-sheet  beneath  the  leaf  to  be 
dampened,  on  which  the  matter  is  to  be  reproduced.  This  is 
wrong,  as  the  water  penetrates  the  manilla  paper,  and,  the  oil- 
sheet  being  impervious  to  water,  the  superfluous  water  between 
the  two  would  make  the  former  too  damp  to  produce  a  clear  and 
perfect  copy.  The  oil-sheets  were  originally  designed  by  the  in- 
ventor of  the'  process  to  be  placed  between  the  copies  after  they 
are  made,  for  the  reason  before  stated. 


150  A  THKEE  WEEKS'  COURSE  OF  PRACTICE. 

335$.  The  eighteen  lessons  can  be  written  up  again,  and  by 
assuming  the  inventory  to  be  $7,100,  the  result  will  show  a  loss, 
and  the  books  must  be  closed  according  to  the  same  rules,  which 
explain  how  to  proceed  in  case  of  loss.  Each  partner's  Net  Loss 
would  be  $42.91-J.  The  Assets  and  Liabilities  will  be  the  same 
as  in  the  other  set,  except  the  reduction  in  the  inventory,  which 
will  reduce  the  assets  $200.00. 


TWO  PROPOSITIONS  IN  SINGLE   ENTRY. 

FIRST. 

335 b.  A  and  B  are  equally  interested  in  business;  at  the  close 
of  the  second  year  their  joint  effects  are  $39,954.24;  their  liabil- 
ities are  $6,264.26.  At  the  beginning  of  the  second  year  A  had 
at  his  credit  $13,393.60  ;  B  had  a  credit  of  $15,820.25.  During 
the  year  A  drew  out  of  the  business  $7,806.12;  B  drew  out 
$5,802.76.  How  much  had  each  remaining  in  the  business  after 
closing  the  books? 

SECOND. 

335<2.  C  and  D  are  contractors  and  builders,  and  are  equally 
interested.  They  erect  one  house  that  cost  $15,436.79.  C  con- 
tributes $6,063.88  ;  D  contributes  $9,372.91.  C  collects  in  vari- 
ous ways  $4,895.65,  and  D  collects  $10,000.  Before  selling  the 
house  they  conclude  to  dissolve  copartnership.  How  much 
money  must  change  hands  to  make  them  equal  owners  of  the 

house  \ 

335<L  In  demonstrating  these  propositions  or  solving  any  problem  in  single 
entry,  first  ascertain  if  there  has  been  a  profit  or  loss,  and  adjust  it  according 
to  agreement,  following  rules  on  page  47, 


ENIGMAS. 

1  2  8 

1462999  1905999  89766 

3350.  Those   who  have  read   tins  book  comprehensively  can 
easily  discover  the  hidden  meaning  of  the  foregoing  figures, 


BUSINESS   METHODS 


A  THREE  WEEKS  COURSE  OF  PRACTICE 


SYNOPSIS. 


FIRST  LESSON. 

We  introduce  and  open  a  set  of  books — Proper  arrangement  of  Columns 
in  a  group — Invest  Cash  in  the  business — Open  the  Partners'  Capital 
accounts;  also  an  account  for  Cash,  Expense,  Office  Furniture,  and 
First  National  Bank— How  to  make  a  deposit — The  sign  of  Debit  and 
Credit  in  the  bank  account — How  to  dispose  of  Gash  over  and  Cash 
short— Hw  to  prove  the  Cash — Importance  of  proving  the  Cash  every 
evening — How  to  post  from  the  Cash-book — How  to  close  it 155 

SECOND  LESSON. 

Buy  goods  on  credit— Open  an  account  with  three  creditors— When  post- 
ing should  be  done — How  to  regulate  space  for  Ledger  accounts — How 
to  arrange  them  for  convenience — Lock  Ledger  explained — Customers' 
Ledger — Purchase  Ledger — Sell  goods  on  credit — Open  an  account 
with  four  customers— Importance  of  keeping  the  address  of  employees 
and  others — How  to  .post  from  the  Journal  and  the  Sales  book 16$ 

THIRD  LESSON. 

A  customer  settles  by  note — Open  a  Bills  Receivable  and  a  Discount  ac- 
count— Difference  between  a  memorandum  and  an  entry — Settle  with 
a  creditor  by  note — Open  an  account  for  Bills  Payable — Charge  up 
more  goods — Requirements  of  the  business  suggest  what  accounts  to 
open — Initials  only  necessary  in  posting — What  regulates  the  dating  of 
notes 167 

FOURTH  LESSON. 

Reopen  the  daily  Cash— A  customer  settles  in  cash  less  the  discount— Set- 
tle with  a  creditor  by  giving  check  on  bank — Petty  Cash — How  to  dis- 
pose of  little  items  of  expense — Open  an  account  with  a  salesman — 
How  to  dispose  of  retail  sales — Five  questions  in  proving  Cash — 
Answers  thereto— Five  more  in  counting  money  in  the  drawer — An- 
swers thereto 171 

FIFTH  LESSON. 

Discount  a  note  at  bank — Open  Interest  account— Difference  between  In- 
terest and  Discount — How  to  find  present  worth  of  a  note — A  creditor 
draws  on  us  at  sight — Pay  day — Pay-roll  explained — How  to  dispose 

151 


SYNOPSIS. 

/ 

of  the  matter  when  part  of  the  employees  are  manufacturers— How  to 
keep  the  bank  account  straight — Buy  goods  and  settle  for  them  by 
note — How  to  dispose  of  the  matter  when  a  new  customer  buys  goods 
and  settles  by  note — Business  method  versus  Commercial  College  non- 
sense— Petit  Accounts  Receivable — Enter  more  goods 175 

SIXTH  LESSON. 

Negotiate  a  loan  at  bank — How  it  is  done— What  regulates  the  rate  of 
interest  charged — Paying  other  people  pursuant  to  instructions  of  a 
creditor  for  his  account — Why  checks  should  not  be  entered  in  Cash- 
book  soon  as  drawn — A  customer  returns  damaged  goods — Another 
.customer  declines  to  pay  for  case  and  cartage — What  to  do  in  each 
instance 180 

SEVENTH  LESSON. 

Two  customers  settle  by  note — How  both  are  disposed  of  at  the  same  time 
— We  transfer  one  note  to  a  creditor  in  part  settlement — Buy  more  goods 
on  credit — A  creditor  draws  on  us  at  10  days  sight — When  the  book- 
keeper \vould  be  permitted  to  sign  the  firm  name — When  he  would  not 
be  permitted  to  sign  it— Power  of  attorney — Absurdity  of  not  allowing 
the  book-keeper  to  indorse  checks  for  deposit — Authentic  signature — 
Circumstances  alter  cases— A  sharp  trick  checkmated 184 

EIGHTH  LESSON. 

Additional  investment  by  one  partner — Two  customers  request  us  to  draw 
on  them  at  sight — Their  object— How  we  would  proceed  in  the  mat- 
ter— Open  an  Exchange  account— When  and  how  to  dispose  of  the  dif- 
ferences that  arise  in  cash  settlements — Importance  of  being  method- 
ical— Buy  goods  C.  O.  D. — Importance  of  explanation  in  every  cash 
transaction — Return  of  the  transferred  note — Counter  entry — Buy  more 
goods  on  time — When  the  year  and  month  must  appear  on  the  books — 
How  to  enter  goods  sold  C.  O.  D. — Exchange  on  New  York 188 

NINTH  LESSON. 

Heceive  by  the  same  mail  a  remittance  from  two  customers,  less  discount 
— How  to  dispose  of  the  matter  when  the  money  we  receive  includes  a 
part  that  must  be  handed  to  another — An  error  due  to  inexperience 
and  lack  of  judgment — Pay  two  other  creditors  by  giving  check — Draw 
on  a  customer  at  15  days  sight — Charge  up  more  goods 198 

TENTH  LESSON. 

.A  customer  remits  on  account — Pay  our  acceptance  due  this  day — How  it 
would  be  paid — Start  a  salesman  on  the  road,  advancing  him  money  to 
pay  expenses — Advantage  in  giving  him  a  check  for  part  of  it — How 
to  dispose  of  the  matter — Why  it  would  be  wrong  to  charge  it  to  his 
personal  account — How  he  would  get  the  check  cashed  when  possibly 
1000  miles  awa)r — How  to  close  the  monthly  Cash-book — How  to  ex- 


SYNOPSIS.  153 

plaiii  the  results — Open  salesman's  travelling  account — How  to  close 
the  Sales-book  at  the  end  of  the  month — An  entry  peculiar  to  the  last 
day  of  every  month  on  the  Journal — How  to  close  the  Journal — DTT^~ 
ference  between  giving  and  agreeing  to  give 19 

ELEVENTH  LESSON. 

Trial  Balance — How  to  proceed  in  making  it — How  to  find  errors  in  Trial 
Balance— Last  resort — A  Trial  Balance  of  the  usual  form  showing  the 
condition  of  the  books  if  they  have  been  properly  written  up — The 
usual  rule  for  transposition  of  figures  is  the  creation  of  the  inexperi- 
enced—  "  Red  Ink  Promises"  veritable  bosh , .  200 

TWELFTH  LESSON. 

Introduce  a  four-column  Journal ;  also  two  Discount  columns  in  the  Cash- 
book — Buy  more  goods  on  account  from  three  firms— Receive  a  remit- 
tance from  two  more  customers,  less  discount — A  point  in  financiering 
— Pay  a  creditor  by  check,  less  discount — How  to  dispose  of  cartman's 
bill — How  we  know  his  bill  is  correct — A  wrong  conclusion  naturally 
drawn  by  the  student — Inconsistency,  thou  art  not  a  jewel — Charge  the 
same  customers  with  more  goods— How  to  read  the  peculiar  entries  on 
the  Cash-book  this  month,  and  how  to  post  them 201 

THIRTEENTH  LESSON. 

Pay  our  first  note  which  falls  due  this  day — How  it  would  be  paid — Bank 
account  overdrawn — Peculiar  way  of  showing  overdraft — When  per- 
mitted to  overdraw — How  to  make  it  good — The  great  advantage  of 
getting  our  customers  to  give  us  notes — The  unsatisfactory  method 
adopted  by  many  book-keepers— Discount  several  notes  at  bank — How 
to  charge  the  bank  account  with  the  proceeds  and  restore  it  to  its 
normal  condition — How  to  dispose  of  the  box-maker's  bill 207 

FOURTEENTH  LESSON. 

A  customer's  note  goes  to  protest — What  is  meant  by  protest — Having  dis- 
counted the  note  at  bank  we  must  pay  it  for  our  customer— Give  the 
bank  a  check  upon  themselves— Bank  account  again  overdrawn — 
Receive  an  opportune  remittance  from  a  customer,  less  discount — 
Lend  money  on  bank  principles — An  apologetic  letter  from  a  delin- 
quent customer — Fabrication  from  whole  cloth — Receive  a  new  note 
in  renewal  of  protested  note,  covering  protest  fees  and  interest — The 
business  method  of  disposing  of  the  matter;  also  the  Commercial  Col- 
lege method— Logic  versus  old-fogyism 211 

FIFTEENTH  LESSON. 

Receive  a  4  mos.  note  from  a  customer — Another  customer  calls  in  his  note 
before  it  is  due — How  to  withdraw  a  note  previously  discounted  at 
bank  and  substitute  another  of  different  amount  and  different  time  to 
run — Theory  versus  practice— Why  Business  College  methods  are  im- 


154  SYNOPSIS. 

practicable — Old  fossils  (Business  College  presidents)  handled  without 
gloves— Pay  another  note — Introduce  two  transient  customers'  ac- 
counts—Charge an  employee  with  goods 215 

SIXTEENTH  LESSON. 

Another  note  due  to  day,  which  we  renew— How  to  renew  a  note  at  bank 
How  to  renew  a  note  if  held  by  private  parties — Receive  remittance 
for  draft  made  on  a  customer,  less  exchange — A  customer  remits  for 
two  bills,  less  discount — Another  makes  a  payment  on  account — How 
to  counteract  a  loss  of  discount 218 

SEVENTEENTH  LESSON. 

A  customer  fails  and  settles  at  40^— Open  an  account  for  Profit  and  Loss 
— Travelling  salesman  returns  and  accounts  for  the  money  advanced 
him — How  to  adjust  it  on  the  books — Why  we  prefer  to  make  all  pay- 
ments by  check — The  junior  partner  draws  money — The  peculiar  man- 
ner of  closing  the  books  this  month  explained — Adjust  the  interest  on 
the  senior  partner's  additional  capital ."*. 220 

EIGHTEENTH  LESSON. 

Trial  Balance — The  end  of  the  season — Close  the  Ledger  and  adjust  the 
profits — Show  Assets,  also  Liabilities — Make  a  final  Balance  Sheet — 
Reopen  the  books,  ready  for  a  new  year — Proof  figures  that  the  books 
have  been  written  up  correctly — Two  propositions  in  single  entry 
book-keeping,  showing  how  to  adjust  the  interest  of  each  partner  in 
the  business — Simple,  although  but  few  can  do  it — Enigmatic  figures 
— Grand  Coup  de  grace 225 

MANUFACTURING  BUSINESS. 

How  the  books  are  conducted — Their  wonderful  details  explained — Book  of 
Costs — How  to  make  cost  price — How  to  make  selling  price— Four  in- 
teresting afterthoughts— How  to  treat  accommodation  paper — Realities  and 
formalities — Private  mark  for  cost  price — How  to  dispose  of  small  sums 
advanced  to  employees— Machinery  and  fixture  account— How  to  ensure 
punctuality — Why  some  firms  pay  off  Friday  instead  of  Saturday — How 
to  dispose  of  piece-work  turned  in  but  not  paid  for. 

COMMISSION  BUSINESS. 

Produce,  Cotton  and  Tobacco,  also  Dry -goods  commission  business— How  the 
books  are  kept  for  each— Form  of  consignment  book — When  it  would  not 
be  needed — The  conventional  idrrrTot'co'nsignment  book  found  in  other 
publications  not  practicable— Account  sales-book— Form  of  an  Account 
Sales — How  to  journalize  an  account  sales — How  to  dispose  of  money  ad- 
vanced on  goods  in  transitu — Factory  erroneously  called  Mill — How  the 
commission  merchant  adjusts  the  discount  between  manufacturer  and 
dealer— Drawback,  its  object  and  how  managed— A  system  preventing 
delivery  of  goods  that  have  neither  been  charged  nor  paid  for. 


A  THREE  WEEKS' 

COURSE   OF  PRACTICE, 


CONSISTING   OP 


EIGHTEEN  LESSONS  OF  ONE  HOUR  EACH. 


FIRST   LESSON. 

1.  If  we  were  called  upon  to  open  a  set  of  books  for  a  firm 
just  beginning  business,  and  given  carte  Blanche  to  buy  what- 
ever books  we  needed,  it  would  be  important  to  know  what  the 
necessary  books  were,  which  would  be  governed  to  a  certain  ex- 
tent by  the  kind  of  business  in  which  the  firm  was  engaged. 

2.  In  any  business,  however,  where  the  books   are   kept   by 
double  entry  we  would  require  a  Cash-book,  Sales-book,  Journal, 
and  Ledger,  as  principal  books;  also  Check-book  and  Bill-book 
(including  Bills  Receivable  and  Bills  Payable  in  one  book),  a& 
principal  auxiliaries,  adding  from    time  to  time  any  others  we 
found  use  for  as  being  convenient  for  reference  for  special  pur- 
poses. 

3.  The  peculiarities  as  to  ruling  and  usage  of  each  book  ai 
fully  explained  on  pages  51,  52,  53,  54,  55,  56, 57,  60,  and  61,  wliicli 
see,  and  which  should  be  read  thoroughly  and  comprehensivefyT 

4.  Let  us  assume  that  yourself  and  the  writer  form  a  copart- 
nership for  carrying  on  a  wholesale  and  retail  mercantile  busi- 
ness under  the  firm- name  of  P.  A.  Wright  &  Co.,  each  contrib- 
uting $1000  in  cash  capital,  constituting  each  equal  partners  in 
the  business,  sharing  alike  in  the  gain  or  loss  of  the  enterprise. 

5.  The  first  entry  would  necessarily  be  a  cash  entry  in  the  Cask- 


156  A  THREE  WEEKS'  COURSE  OF  PRACTICE. 

book.  We  therefore  open  our  Cash-book  at  page  2,  as  it  would 
require  two  pages  (2  and  3)  to  make  one  in  this  book — the  left- 
hand  or  page  2  for  the  debit  side,  and  the  right-hand  or  page  3 
for  the  credit  side. 

6.  The  pale  blue  line  running  across  the  page  J  inch  above 
the  triple  line  (two  red  and  one  blue),  at  the  top  of  the  page  in 
every  blank-book,  is  made  to  be  written  upon,  but  there  must  be 
no  writing  on  the  triple  line,  except  perhaps  headings  of  col- 
umns.     Those  familiar  with  blank-books  of  course  understand 
this  fact,  but  those  not  accustomed  to  work  on  books  would  not 
understand  without  this  explanation. 

7.  We  head  our  Cash-book  DR.  on  the  extreme  left  of  page  2, 
and  CR.  on  the  extreme  right  of  page  3,  and  CASH  about  midway 
of  each  page  on  the  pale  blue  line  above  alluded  to.     Head  each 
column  as  it  is  headed  in  our  miniature  Cash-book,  pages  64  and 
65,  omitting  the  discount  on   both  sides  on  the  supposition  that 
we  will   have  no  use  for  them   the  first  month.     The  amount 
columns  must  always  be  on  the  right  of  the  group,  where  there 
are  many,  and  must  always  be  the  widest ;  the  sundries  next  in 
location  and  width.     As  no  book  we  find  ready-made  is  properly 
ruled  for  a  Cash-book,  we  rule  the  necessary  special  columns  our- 
selves; also  the  dividing  line   midway  of  each  page  separating 
Ledger  names  from  the  explanations. 

8.  We  charge  Cash  with  the  money  received  from  the  two 
partners,  and  credit   each  of   their  accounts   by  writing   their 
names  on  the  debit  side  of  C.B.  in  the  space  set  apart  for  Ledger 
names  only,  prefixing  To  in  the  first  instance  and  the  substitutes 
(  „  )  afterwards,  never  repeating  "  To"  or  "  By"  on  any  book.     In 
the  next  space  set  apart  for  explanations  we  write 

Amt.  invested. 

in  the  first  instance,  and  the  substitutes  for  each  word  afterward, 
which  we  will  call  dittoing  hereafter.  The  first  entry  on  debit 
side  of  C.  B.  will  be  written  thus: 

Jan'y  1.  To  P.  A.  Wright  Amt.  invested,  1000.00 

omitting  sign  $,  which  must  never  be  on  the  books. 

9.  Assuming  that  the  money  contributed  by  the  partners  was 
in  checks  on  their  private  bank  for  $1000  each,  we  would  indorse 


FIRST   LESSOX.  157 

them  in  the  firm-name,  that  is,  write  the  firm-name  across  the- 
back,  and  deposit  them  in  the  First  National  Bank,  which -the 
firm  intend  to  keep  their  joint  account  with,  first  noting  the 
amount  of  the  checks  on  a  deposit-slip,  which  would  be  fur- 
nished by  the  bank,  and  which  would  be  attached  to  the  checks 
and  left  at  the  bank  for  their  convenience.  (We  will  refer  to 
the  bank  as  our  'bank  hereafter,  and  use  the  word  in  the  third 
person  plural,  as  it  really  means  the  bankers  themselves.)  The 
Cheek-book  will  be  our  bank  account  and  kept  by  single  entry. 
The  only  sign  we  have  for  debiting  the  bank  is  by  adding  to,  and 
the  only  sign  for  crediting  it  will  be  by  deducting  from  the 
account. 

10.  On  the  fly-leaf  facing  the  first  checks  we  make  the  follow- 
ing memorandum: 

Jan'y  1st,  1888.     Deposited  2000.00. 
1000.00 
1000.00 


2000.00 

first  placing  the  total  amount  of  checks  at  bottom  of  the  line  of 
figures,  then  carrying  it  into  the  column  special1}7  ruled  on  the 
fly-leaf,  on  the  same  line  with  the  word  Deposited,  thereby  charg- 
ing the  bank  with  $2000. 

11.  We  draw  out  $500  by  making  a  check  payable  to  bearer, 
first  making  the  following  memorandum  on  the  stub  from  which 
the  check  will  be  detached  : 

No.  1.  Jan'y  1st,  1888. 

Bearer. 
For  drawer,  500.00. 

Bearer  being  written  midway  of  the  stub  on  a  line  by  itself,, 
and  meaning  the  person  who  presents  the  check  at  bank,  to  whom 
the  money  must  be  paid  without  his  identification.  For  drawer 
must  be  on  the  next  line,  and  means  the  money  was  drawn  and 
put  in  the  cash-drawer,  to  pay  small  bills  for  which  we  would 
not  like  to  make  a  check.  The  amount  must  be  located  in  the 
column,  also  on  same  line  in  the  column  in  the  left  containing 
deposits,  and  deducted  at  once,  showing  balance  in  bank,  $1500. 

12.  We  then  buy  with  part  of  the  money  in  the  drawer  the 


158  A  THREE  WEEKS'  COURSE  OF  PRACTICE. 

necessary  articles  of  furniture  for  the  office,  as  enumerated  in 
Miniature  Cash-book,  page  65,  crediting  Cash  and  charging  Office 
Furniture,  by  writing  it  in  the  space  set  apart  for  Ledger  names 
on  credit  side  of  C.  B.,  prefixing  "  By,"  and  in  the  space  for  ex- 
planations we  name  each  article  purchased,  placing  the  cost  of 
each  directly  over  the  name,  and  extend  the  total  cost  into  the 
sundries  column  on  the  last  line  used. 

13.  We  also  buy  with  cash  from  the  drawer — which  we  will  call 
currency  hereafter — a  set  of  books  and  other  necessary  stationery 
and  desk- ware  (see   page  65),  which  we  charge   to  Expense,  and 
•credit  Cash  same  way  as  last  entry.     In  the  space  for  explanations 
we  name  the  various  articles  of  expense,  and   place  the  cost  in 
the   Special  Expense  column  at  once  when   the  line  is  full,  not 
the  total  cost  of  all  in  one  amount. 

14.  The  reason  for  having  but  one  amount  in  the  Sundries  col- 
umn and  many  in  the  Expense  column  is  because  every  item  in 
the  former  must  be  posted,  and  we  want  as  few  items  therein  as 
possible  ;  while  the  items  in  the  latter  are  not  posted  until  the 
•end  of  the  month,  when  they  resolve  themselves  into  one  amount 
in   the  footing  of  the  column  ;   hence   there  would  be  nothing 
gained  by  consolidating  them  before  extending. 

15.  It  is  customary  with  many  firms  to  have  office  furniture 
charged  to  Expense,  others  have  it  charged    to   Mdse.,  both  of 
which  are  incorrect,  as  office  furniture  is  always  worth  its  cost  to 
us  at  least  for  years  to  come,  hence  could  not  properly  be  regard- 
ed as  an   expense,  which  would  be   making  the  profits  of  first 
year's  business  suffer  for  the  benefit  of  each  succeeding  year  while 
the  furniture  was  in  use;  and  any  partner  retiring  from  the  firm 
first  year  would  find  his  share  of  the  profits  reduced  to  the  ex- 
tent of  his  part  of  the  office  furniture's  cost. 

16.  After  several  years'  use,  the  furniture  would  be  revalued, 
and  a  certain  per  cent  for  wear  and  tear  charged  to  Profit  and  Loss, 
and  credited  in  the  office  furniture  account  by  a  Journal  entry 
of  First  Form. 

17.  We  return  to  our  work  on  the  books,  and  assuming  we  had 
no  further  cash  transactions  for  the  day,  we  prove  the  cash,  that  is, 
see  if  the  difference  between  the  debit  and  the  credit  side  of  Cash- 
book  agrees  with  the  actual  cash  on   hand.     We  take  a  piece  of 


FIRST   LESSON.  159 

paper  which  we  will  call  proof  sheet,  on  which  we  add  the  debit 
side  of  Cash-book,  showing  amount  of  money  received,  $2000. 
We  add  credit  side,  showing  amount  of  money  paid  out  ($245  in 
the  Sundries  and  $36.25  in  the  Expense),  $281.25,  and  the  differ- 
ence $1718.75,  or  balance  on  hand  according  to  C.  B.  In  actual 
business  we  could  not  rely  upon  the  figures  being  correct,  as  we 
are  receiving  and  paying  out  alternately  all  day,  and  may  make 
erroneous  entries  or  possibly  inadvertently  omit  something;  hence 
we  must  verify  the  figures.  The  proof  would  be  to  count  the 
money  in  the  drawer,  and  add  it  on  proof  sheet  to  the  balance  in 
bank  as  per  Check-book,  which  we  find  makes  $1718.75,  and 
therefore  proves  the  cash  has  all  been  entered,  arid  also  proves 
the  bank  account  to  be  correct. 

18.  Not  having  the  actual  money  to  handle  in  this  imaginary 
business,  we  will  find  out  how  much  there  is  in   the  cash-drawer 
by  figuring.     We  know  we  lodged  $500  in  the  drawer  in  the  first 
place,  and  we  also  know  that  we  paid  out  of  the  drawer  $245 
in  one  place  and  $36.25  in  another,  and  hence  there  must  be  still 
remaining  therein  the  difference,  $218.75. 

19.  If  we  find  more  money  than  the  Cash-book  indicates,  that 
means  the  overplus  was  received  from  some  source,  and  not  en- 
tered on  debit  side  of  C.  B.     If  we  find  less  than  we  should  have 
according  to  C.  B.  balance,  that  means  we  have  paid  out  what- 
ever amount  we  are  short,  and  failed  to  enter  it  on  credit  side  of 
C.  B.;  hence  the  great  importance  of  proving  the  cash  every 
evening,  while  the  events  of  the  day  are  still  fresh  in  our  minds, 
which  would  enable  us  by  a  little  reflection  to  recall  every  trans- 
action   during    the   day,    and   discover   the  error  of   omission  ; 
whereas,  if  the  proof  was  deferred  until  next  day,  we  may  never 
be  able  to  discover  the  mistake,  which  would  necessitate  the  very 
unsatisfactory  entry,    Cash  over,  or  Cash  short,  both  of  which 
would  carry  with  them  the  idea  of  a  careless  and,  therefore,  unsafe 
and  unsatisfactory  cashier,  whose  tenure  of  office  would  doubtless 
be  of  short  duration. 

Cash  over,  if  only  a  few  cents,  may  be  accounted  for  by  the 
money  received  for  postage  from  outsiders  or  employees  for  their 
private  correspondence,  and  would  be  disposed  of  by  putting  the 
overplus  in  the  Stamp-box,  which  should  be  kept  in  the  Cash- 


160  A  THREE  WEEKS'  COURSE  OF  PRACTICE. 

drawer,  and  taking  no  further  notice  of  it  until  $3  or  $4 
had  accumulated,  when  we  would  buy  more  postage  with  it 
without  entering  it.  If  the  overplus  is  large,  it  should  be  carried 
to  a  Suspense  account,  as  it  would  be  discovered  in  the  future, 
most  likely,  and  could  then  be  properly  adjusted  by  a  cross-entry 
in  the  Journal.  We  would  enter  it  on  the  debit  side  of  Cash- 
book,  thus : 

To  Suspense.  Cash  over. 

Then  open  a  Suspense  account  in  the  Ledger,  and  on  credit  side 
write 

By  Cash. 

Cash  short,  if  only  a  few  cents,  we  would  make  good  out  of 
our  own  private  funds,  or  out  of  the  Stamp-box,  for  the  purpose 
of  keeping  the  cash  straight.  If  the  shortage  was  several  dollars, 
it  should  be  charged  to  Suspense  on  the  credit  side  of  the  Cash- 
book  thus : 

By  Suspense.  Cash  short. 

and  if  the  various  items  that  may  have  been  carried  to  the 
Suspense  account  are  not  discovered  during  the  year,  we  would 
then  adjust  the  difference  by  carrying  it  to  the  Profit  and  Loss 
account.  Many  book-keepers  charge  the  shortage  to  Expense, 
others  to  Profit  and  Loss  at  the  time  it  occurs,  and  the  overplus 
they  enter  in  the  Mdse.  column,  or  at  the  credit  of  Profit  and 
Loss;  but  as  it  is  a  matter  really  in  Suspense  for  the  time  being, 
and  likely  to  be  discovered  any  da}7,  it  would  be  better  to  have  a 
Suspense  account,  as  you  can  readily  see. 

20.  If  the  balance  is  proven  to  be  correct,  we  write  up  the  daily 
cash,  as  it  were,  by  extending  the  total  of  each  column  into  the 
outside  or  amount  column,  on  the  last  line  used  in  each  column 
on  both  sides. 

21.  Then  balance  the  daily  cash  in  red  ink,  thus : 

1500  218.75 

Balance  Bank  Drawer  1718.75 

placing  the  figures  representing  money  in  the  bank  and  in  the 
drawer  directly  over  the  words, — in  two  lines  precisely  as 
they  are  given  above, — and  extending  the  total  of  the  amounts 
into  the  outside  column,  making  those  two  columns  agree. 


FIRST   LESSON.  161 

22.  Then  close  them  by  underlining  thus :  draw  a  single  red 
line  across  each  on  the  same  line,  beginning  on  the  credit  sicTe~on 
same  line  with  the  red-ink  figures,   because   the  entries  extend 
further  down  the  page  on  that  side  than  on  the  debit,  there  being 
considerable  space  on    the    debit   side  not   used,  draw   a   short 
line   across   the   column    for   days   on    that   side,  on    same   line 
with  the  other  just  drawn,  as  a   basis  from  which   to  rule   an 
oblique  red  line  terminating  at  the  Mdse.  column  on  the  last  line 
used  on  that  side ;  then  on  the  next  line  draw  a  double  red  line 
across  amount  columns  on  both  sides,  thereby  closing  them.    Also 
draw  a  single  line  across  the  main  part  of  the  book,  on  same  line 
with  the  closing  double  lines,  beginning  at  the  line  separating 
months  and  days  on  each  side  and  terminating  at  the  special 
columns,  to  keep  each  day's  work  separate  from  the  other.     We 
leave  the  two  specials  and  two  sundries  columns  open  until  the 
end  of  the  month,  to  enable  us  to  get  a  monthly  result. 

23.  After  closing  the  cash  we  post, — make  the  final  entry  in 
the  Ledger.     See  page  35,  about  FIRST  PART  and  COUNTER  PART. 

Let  us  always  bear  in  mind  that  we  make  two  entries  of  every 
transaction — first  and  final  entry — and  if  the  account  is  debited  in 
the  first,  it  must  also  be  debited  in  the  final  entry  ;  or  if  credited 
in  the  first,  it  must  also  be  credited  in  the  final. 

On  first  page  in  the  Ledger  we  open  an  account  with  the 
senior  partner  by  writing  his  name  on  the  blue  line  (see  para 
graph  6),  locating  it  half-way  between  DR.  on  the  left  and  OR.  on 
the  right.  We  then  read  first  entry  on  the  debit  side  of  C.  B., 
thus:  Cash  Dr.  to  P.  A.  Wright,  $1000,  the  cash  being  already 
disposed  of  temporarily  in  the  C.  B.,  which  is  the  Ledger  cash 
account;  we  pass  it  and  turn  to  P.  A.  Wright's  account  just 
opened  in  the  Ledger,  and  reason  thus :  Cash  having  been  debited 
$1000  to  P.  A.  Wright,  his  account  must  be  credited  by  cash 
$1000,  thus : 

Jan'yl.  By  Cash,  2,  1000.00. 

Then  return  to  C.  B.,  and  in  folio  column  place  the  figure  1 
opposite  his  name,  showing  Ledger  page  where  his  account  is 
opened.  Half-way  down  first  page  in  the  Ledger  we  open  an 
account  with  the  junior  partner,  repeating  the  DR.  and  the  GB. 


162  A  THREE  WEEKS'  COURSE  OF  PRACTICE. 

as  a  matter  of  uniformity,  making  the  written  line  as  long  as  the 
one  at  top  of  page;  proceed  in  the  same  way  in  disposing  of  his 
account,  by  reading  next  entry  on  that  side  of  C.  B.  of  which  his 
name  is  the  last  part,  and  Cash  Dr.  the  first  part.  In  fact.  Cash 
Dr.  constitutes  first  part  of  every  entry  on  that  side  of  the  page, 
and  must  be  repeated  in  connection  with  every  name  on  that  side 
in  the  space  for  Ledger  accounts,  which  must  be  credited  by  Cash. 

24.  Open  Office  Furniture  account  on  page  2  in  the  Ledger ; 
then  read  first  entry  on  credit  side  of  C.  B.  thus:   Cash  Cr.  ~by 
Office  Furniture.     Cash  being  credited  already  on  the  C.  B., 
which  is  the  Ledger  Cash-account  for  the  present,  we  pass  it  and 
turn  to  Office  Furniture  account  just  opened  in  the  Ledger,  and 
reason  thus:  Cash  having  been  credited  by  Office  Furniture  $245, 
the  Office  Furniture  must  be  debtor  to  Cash  $245,  according  to 
the  first  law  of  double  entry  (which  see,  page  29),  thus : 

Jany.  1.  To  Cash,          3,         245.00. 

Mark  it  posted  by  putting  figure  2  in  the  folio  column  in  Cash- 
book,  on  the  same  line  with  Office  Furniture. 

25.  We  read  the  next  entry  on  credit  side  of  C.  B.  thus :  Cash 
credit  by  Expense,  which  means  that  expense  must  be  debited  to 
cash,  and  will  be,  not  at  present  because  it  is  in  a  special  column, 
but  at  the  end  of  the  month  in  the  final  footing  of  the  column  ; 
we  pass  it  for  the  present,  and  check  it  thus  (  |/),  showing  it  had 
not  been  overlooked. 

26.  Cash  Cr.  is  first  part  of  every  entry  on  that  side  of  C.  B., 
and  it  must  be  repeated  in  connection  with  every  name  on  that 
side  in  the  Ledger  accounts  that  are  to  be  charged.     This  would 
end  the  first  lesson  of  practice,  and  nothing  further  should  be 
done  until  next  day  except  study  the  definitions  on  pages  17  to 
21,  and  the  eight  short  rules  on  page  29,  which  must  be  committed 
to  memory. 

26|-.  Review  this  and  each  succeeding  lesson  according  to  the 
questions  in  that  part  of  appendix  relating  to  the  lessons,  then 
pursue  order  of  reading  JVo.  4  on  page  6.  The  events  of  the  'busi- 
ness as  narrated  in  each  lesson  must  be  remembered,  also  the  man- 
ner of  disposing  of  them  on  the  book,  so  that  if  similar  events 
take  place  hereafter  in  the  reader's  experience  he  may  know  how 
to  dispose  of  them  also.  All  words  and  phrases  in  italics  have  a 
special  significance,  hence  must  ~be  specially  remembered. 


SECOND    LESSON.  163 


SECOND   LESSON. 

Head  the  Journal       KEW  YORK,  JANUARY  1st,  1888. 

27.  Let  us  suppose  that  we  bought  on  credit  $2000  worth  of 
goods,  which  we  receive  from  three  firms  as  follows  :  Wright 
Mfg.,  $1000 ;  Earle  &  Co..  $500 ;  and  Sanford  &  Co.,  $500,  for 
which  we  have  their  Invoices  before  us.     As  the  goods  are  taken 
out  of  the  cases  the  receiving  clerk   must  check  each  item   of 
quantity  on  every  bill,  and   if  all  the  goods  are  found  that  the 
bills  call  for,  he  marks  O.K.  on  each  bill  and  signs  his  initials ; 
then  hands  them  into  the  office,  when  the  prices  the  goods  are 
charged  at  would  be  checked  on  each  bill  by  the  buyer,  after 
which  he  O.K.'s  them  also,  when  it  becomes  the  book-keeper's 
duty  to  examine  and  check  the  extensions  and  footings  of  each 
bill  and  put  his  O.K.  on  them, — all  of  which  means  the  goods  are 
in  store  and  that  we  owe  the  three  firms  the  amount  of  their 
respective  bills,  which   facts  must  be  recorded   in   the   Journal 
according  to  /Second  Form,  charging  Mdse.  with  total  amount  of 
all   the  bills  and   crediting  each   firm   by  the  amount   of  their 
respective  bills ;  then  explain  on  the  next  line  after  completing 
the  journal  entry  (use  Two  Column  Journal,  see  page  82), 

As  per  bills  on  file, 

which  explanation  carries  with  it  the  idea  that  the  goods  were 
purchased  on  account ;  otherwise  the  bills  would  not  be  on  file  but 
thrown  into  the  waste-basket. 

28.  After  we  have  entered  the  bills  we  mark  on  the  face  of  each 
with  colored  pencil  J 1,  which  means  entered  on  page  1  in  the 
Journal,  and  when  the  bills  are  brought  to  our  attention  again,  as 
they  doubtless  would  be  found  on  our  desk  many  times  in  the 
future,  when  somebody  had  been  looking  them  over  for  some 
reason,  we  will  not  fall  into  the  egregious  error  of  re-entering 
them,  which  wre  may  do  if  we  did  not  see  the  destinctive  mark 
showing  they  had  already  been  properly  disposed  of. 

29.  Posting  can   be  done  at  intervals  when  there  is  nothing 
more  important  requiring  our  attention  ;  it  should  be  done  every 


164 

day  if  possible,  but  can  be  deferred  indefinitely  if  we  were  pushed 
for  time.  In  posting  the  entry  just  made  on  the  Journal  we 
dispose  of  Mdse.  first  because  it  is  the  first  account  in  the  entry. 
We  open  a  Merchandise  account  on  page  3  in  the  Ledger,  writing 
it  and  all  Ledger  headings  hereafter  in  full  with  DR.  on  the  left 
and  CB.  on  the  right  of  the  name.  Then  read  the  Journal  entry 
— Mdse.  Dr.  to  Sunds. — thereby  getting  our  double-entry 
proposition  thoroughly  fixed  in  our  mind;  then  turn  to  Mdse. 
account  just  opened  in  the  Ledger  and  repeat  the  proposition 
from  the  Ledger  standpoint,  beginning  at  top  of  the  page  where 
Mdse.  Dr.  is  already  written  :  then  supply  To  Sundries  thus : 

Jan'y  1.  To  Sundries,        1,       2000.00. 

on  the  debit  side.  Turn  to  the  Journal  and  write  3  on  the  line 
with  Mdse.  in  the  column  designed  for  days  on  the  left,  meaning 
posted  on  page  3  in  the  Ledger. 

30.  Then  open  an  account  with  Wright  Mfg.  Co.  on  page  4  in 
the  Ledger,  and  credit  it  By  Mdse.  thus : 

Jan'y  1.  By  Mdse.          1,        1000.00, 

also  marking  it  posted  same  way.  In  order  to  see  clearly  why 
we  credit  their  account  by  Mdse.  we  read  the  Journal  entry  again. 
Mdse.  Dr.  to  Sunds.,  which  means  Mdse.  is  debtor  to  the  following 
accounts;  and  as  theirs  is  one  of  the  following,  Mdse.  is  therefore 
debtor  to  them,  and  their  account  must  be  credited  by  Mdse 
according  to  the  law  of  double  entry,  page  29.  Open  account 
with  Earle  &  Co.  on  page  5  in  the  Ledger,  crediting  it  the  same 
way  and  for  the  same  reason.  Half-way  down  the  page  open 
account  with  Sanford  &  Co.,  disposing  of  it  in  the  same  manner, 
pursuing  the  same  line  of  reasoning.  Do  not  forget  the  post 
marks,  which  must  never  be  made  until  the  transfer  is  completed. 

31.  In  opening  Ledger  accounts  the  inexperienced  would  be  at 
a  loss  to  know  how  much  space  to  assign  them  ;  there  can  be  no 
definite  rule  given  to  govern  that  matter,  but  on  general  princi- 
ples we  assume  that  more  business  will  be  done  with  the  account 
where  the  first  entry  would  be  for  a  large  amount,  than  if  it  had 
been  smaller.    The  smaller  the  initial  entry,  therefore,  the  smaller 
the  space  assigned  each.     It'  the  space  proves  to  be  excessive,  it 


SECOND    LESSON.  165 

can  be  appropriated    to   another  account  any  time,  and  if  not 
enough,  the  account  can  be  continued  on  another  page. 

32.  As  a  matter  of  convenience  we  group  together  on  consecu- 
tive pages  in  the  Ledger  the   accounts  of  creditors,  also  those  of 
customers  in   another  part  of  the  Ledger.     The   representative 
and   the  speculative  accounts,  together  with  the  partners'  capital 
accounts,  are  by  many  firms  kept  in   a  Lock-ledger   for  privacy. 
If  we  have  no  access  to  the  Lock-ledger,  we  would  keep  a  LOCK- 
LEDGER  account  on  the  general  Ledger,  to  represent  the  matter 
belonging  in  the  private  Ledger.     In  a  large  business  there  is 
kept  a  Customers'  Ledger,  for  their  accounts  only ;  also  a  Pur- 
chase Ledger  for  our  creditors  only.     If  we  have  the  key  to  Lock- 
ledger,  we  must  consider  all  three  Ledgers  in  making  trial  bal- 
ance, as  neither  one  is  supposed  to  balance  in  itself.     If  no  Lock- 
ledger  is  kept,  then  the  first  few  pages  in  general  Ledger  must 
be  reserved  for  the  partners'  capital  accounts,  and  the  speculative 
accounts  put  in  the  back  part,  where  they  would  be  more  secluded 
and  private. 

33.  We  next  introduce  practically  the  Sales-book,  by  charging 
therein  four  firms  whom  we  are  supposed  to  have  sold  on  various 
terms  of  credit,  explained  on  pages  84  and  85.     First  head  the 
page  MONDAY,  JANUARY  1st,  1888,  and  charge  Miller  &  Bros.,  St. 
Louis,  5$,  30  days,  $134.85,  for  goods  consisting  of  shirts,  collars, 
and  cuffs,  an  itemized  account  of  which  must  be  made  in  the 
Sales-book,    duplicating  first   entry  on  pnge  86.      Charge   J.  C. 
Brown  &  Co.,  Chicago,  4%,   60   days,  $240.50,  duplicating  the 
last  entry  on  page  87,  adding  2  doz.  more  No.  4  at  13  and   one 
doz.  more  No.  1,  at  10.     Charge  W.  C.  Browning  &  Co.,  Detroit, 
3$,  90  days,  $217.75,  duplicating  first  entry  on  page  88.     Charge 
Davis  &  Co.,  Cincinnati,  4  mos.,  net,  $209.75,  duplicating  last 
entry  but  one  on  page  87.     These  four  charges  will  about  fill  first 
page   in    the    Sales-book,    and    complete    the   first   day's    sales. 
We  draw  a  red  line  between  each  entry,  terminating  at  first  col- 
umn on  the  right  and  across  the  outside  column  at  the  bottom  of 
the  page,  adding  it,  and  on  same  line  with  the  footing  write  ami. 
carried  forward,  and  on  first  line  on  next  page  write  ami.  bro*t 
forward. 

34.  We  then  post  from  the  Sales-book,  open  Miller  &  Bros.' 


166 

account  on  page  6  in  the  Ledger  (see  page  98),  and  say,  Miller  & 
Bros,  having  been  charged  in  the  Sales-book  they  must  also  be 
charged  in  the  Ledger  (see  paragraph  23).  On  the  debit  side  of 
their  account  we  make  the  following  entry,  viz. : 

Jan'y  1.  To  Mdse.  5/30,        1,        134.85 

then  mark  it  posted  on  the  Sales-book  by  placing  6  (the  Ledger 
page)  in  the  first  column  on  the  left  on  same  line  with  their 
name.  Open  account  with  J.  C.  Brown  &  Co.  half-way  down 
the  same  page,  Dr.  on  the  left  and  Cr.  on  the  right,  and  their 
address  on  next  line  on  the  right  from  the  date  on  that  side; 
then  on  next  line  below  the  address  we  write  on  the  debit  side 
of  their  account: 

Jan'y  1.  To  Mdse.  4/60,        1,        240.50. 

Mark  it  posted  same  way  as  last  entry.  There  must  oe  no  red 
lines  across  the  page  either  below  or  above  the  name  in  the  mid- 
dle of  the  page.  That  would  be  extremely  bad  taste.  Open  ac- 
count on  page  7  in  the  Ledger  with  W.  C.  Browning  &  Co.  same 
as  Miller  &  Bros.,  and  on  debit  side  make  the  following  entry: 

Jan'y  1.  To  Mdse.  3/90,        1,        217.75, 

and  mark  it  posted.  Half-way  down  page  7,  open  account  with 
Davis  &  Co.,  on  same  line  with  J.  C.  Brown  &  Co.  on  opposite 
page,  stating  their  address  same  way,  and  post  the  same  way, 

Jan'y  1.  To  Mdse.  4/m.,        1,        209.75, 

and  mark  it  posted  also. 

35.  It  will  then  occur  to  our  mind  that  we  have  made  four 
debit   entries   in    the   Ledger,  but  no   credit,  which  the  law  of 
double  entry  requires  must  be  made.     We  will  make  the  credit 
entry  at  the  end  of  the  month  by  posting  the  final  footing  of  the 
sales-book  on  the  credit  side  of  Mdse.  account  thus, 

Jan'y  1/31.     By  Sundries — (giving  the  page  in    Sales-book)  $ — (stating  the 

amount), 

and  mark  it  posted.     (See  description  of  Sales  Book,  on  page  54.) 

36.  It  will  be  noticed   that  the  address  of   each  customer  is 
stated  in  their  Ledger  account,  which  was  not  the  case  with  our 


THIKD    LESSON  167 

creditors'.  The  reason  is,  we  send  our  customers  monthly  state- 
ments, which  are  made  from  the  Ledger  account,  and  by  having 
their  address  before  iis  we  know  where  to  send  the  statement 
without  having  to  look  elsewhere  for  it.  On  the  other  hand,  our 
creditors  send  their  statement  to  us,  which  would  show  their  ad- 
dress, to  which  we  must  make  a  remittance  when  the  account  is 
due. 

37.  It  is  best  to  have  the  address  of  everybody  we  deal  with 
appear  in  their  Ledger  account.  It  is  also  important  to  keep  the 
address  of  every  employee,  so  that  in  case  of  unexplained  absence 
we  can  communicate  with  them,  and  for  that  reason  we  keep 
their  names  on  an  address-book.  -  We  must  remember  who  we 
buy  from,  also  to  whom  we  sell,  so  that  we  can  better  understand 
future  transactions  with  either  our  creditors  or  customers. 


THIRD   LESSON. 

38.  January  5. — First  thing  this  lesson  we  suppose  that  we 
have  received  by  request  a  thirty-day  note  from  Miller  &  .Bros, 
for  the  amount  of  their  bill  Jan'y   1st,  less  6%.     By  turning  to 
their  Ledger  account  we  get  the  amount  of  their  bill,  $134.85, 
$%  of  which  is  $6.74,  and  the  difference  the  amount   of  note, 
$128.11,  or  the  amount  we  expected  to  get  when  their  bill  became 
due,  that  is,  30  days  from  date  of  purchase.     The  note  would  be 
dated  same  date  of  bill,  so  as  to  fall  due  same  day  the  bill  would 
be  payable.  We  record  the  facts  of  this  settlement  in  the  Journal, 
charging  Sills  Receivable  with  the  amount  of  note,  and  charging 
the  5$  to  Discount*  on  the  supposition  that  we  want  to  know  how 
much  such  deductions  amount  to  during  the  year ;  otherwise  we 
would  charge  it  toMdse.,  which  has  been  overcredited  that  much, 
and  crediting  Miller  &  Bros.'  account  by  total  of  both,  or  tlje 
full  amount  of  their  bill. 

39.  We  credit  them  by  the  amount  of  note,  because  they  de- 
livered it  to  us,    and  by  the  discount  because  we  allowed  it  to 
them,  two  of  the  conditions  when  personal  accounts  are  credited. 


168  A  THREE  WEEKS'  COUKSE  OF  PRACTICE. 

See  page  30.  By  allowing  them  the  discount  we  lose  it,  and  for 
that  reason  debit  it.  The  Journal  entry  will  be  made  according 
to  Third  Form.  The  explanation  following  the  Journal  entry 
will  be : 

Received  their  note  of  Jan'y  1st,  at  30  days,  in  settle- 
ment of  bill,  Jan'y  1,  $134.85  less  5f0  =  $6.74  =  $128.11. 

40.  We  also  make  an  extra  memorandum  on  Bills  Receivable 
book,  from  the  note  itself,  which  would  specify  where  it  must  be 
presented  for  payment,  which  we  assume  is  at  their  office.     See 
page  126.     In  fixing  the  date  the  note  becomes  due,  three  days  of 
grace  must  be  added.     We  allude  to  this  operation  as  making 
a  memorandum.,  and  the  record  on  the  Journal  we  call  making 
an  entry*    the  difference  between  an  entry  and  a  memorandum 
is,  the  former  is  a  statement  of  facts  with  reference  to  Debit  and 
Credit,  and  the  latter  is  a  minute  of  the  facts  in  the  fewest  words 
possible  to  be  intelligible. 

41.  We  give  our  note  to  Earle  &  Co.  by  their  request,  to  settle 
their  bill  of  Jan'y  1st,  less  5^,  which  we  would  be  entitled  to  ac- 
cording to  terms  of  purchase  which  would  be  stated  on  bill.     By 
turning  to  their  Ledger  account  we  find  the  amount  of  their  bill 
to  be  $500,  5%  of  which  is  $25,  and  the  difference  the  amount  for 
which  we  give  our  note.     We  record  the  facts  of  this  settlement 
in  the  Journal,  also  charging  Earle  &  Co.  with   full  amount  of 
their  bill,  and  crediting  Bills  Payable  with  the  amount  of  note 
issued,  and  the  $%  we  credit  Discount. 

42.  The  note  we  deliver  to  them,  and  the  Discount  they  allow 
us,  and  the  two  balance  their  account,  two  of  the  conditions  under 
which  we  debit  personal  accounts.     See  page  30.     The  Discount 
being  allowed  to  us,  we  therefore  make  it,  and  for  that  reason 
credit  it, 

43.  We  also  make  an   extra  memorandum   on    Bills  Payable 
book  from  the  note  itself  before  parting  with  it,  according  to  the 
facts  set  forth  in  the  headings  of  the  B.  P.  book.     See  page  127. 
In  fixing  the  date  of  maturity  add  three  days  of  grace,  and  assume 
that  we  made  note  payable  at  our  "bank.     The  Journal  eutyv  will 
be  according  to  Second  Form  and  explained  as  follows: 

Gave  them  our  note  of  Jan'y  1st  at  29  days  in  settle- 
ment  of  bill,   Jan'y  1,   $500,  less  5%  =  $25  =  $475 


THIRD   LESSOR.  169 

-14.  We  next  post  the  two  Journal  entries  just  made,  begin- 
ning with  Miller  &  Bros,  first,  because  theirs  is  the  first  account 
in  the  first  entry  to  be  posted.  We  rend  the  double  entry  propo- 
sition as  stated  in  the  Journal  entry — Sundries  Dr.  to  Miller  <& 
Bros. — then  turn  to  their  account  in  the  Ledger  and  say  if  sun- 
dries are  debtor  (which  in  fact  they  are,  in  first  entry,  and  will 
be  when  posted),  their  account  must  be  credited  by  sundries, — 
and  make  the  following  entry  on  credit  side  of  their  account : 

Jan'y  5  By  Sundries,        1,        134.85. 

Mark  this  posted  by  placing  the  number  of  their  page  in  the 
Ledger  on  the  line  with  their  account  in  the  small  column  on 
the  left  of  the  entry  in  the  Journal. 

45.  We  d-ispose  of  the  Sundries  next,  and  as  Bills  Receivable 
is  the  first,  we  open  Bills  Receivable  account  on   page  8  in  the 
Ledger.     We  then  get  our  double  entry  proposition   before  us 
again  as  it  is  in  the  Journal,  Sundries,  Dr.  to  Miller  &  Bros., 
which  means  the  following  accounts  are  debtor  to  them,  and  Bills 
Receivable,  being  one  of  the  following,  is  for  that  reason  debtor 
to  Miller  &  Bros.     We  make  the  following  entry  on  debit  side 
of  Bills  Receivable  account: 

Jan'y  5.  To  M.  &  Bros.,        1,        128 11, 

the  initials  of  any  account  being  all  that  is  necessary  in  posting, 
but  not  so  in  original  entry,  where  the  name  must  be  in  full. 

46.  We  open  Discount  account  on  page  9  in  the  Ledger,  and 
dispose  of  it  next,  proceeding  in  the  same  way  as   in  the  case 
of  Bills  Receivable,  pursuing  the  same  line   of   reasoning,  and 
making  the  same  entry  on  the  debit  side  except  in  amount.  Then 
mark  it  posted. 

47.  Read  the  next  Journal  entry,  Earle  &  Co.  Dr.  To  Sunds. 
$500.     Turn  to  their  account  in  the  Ledger  and  repeat  the  propo- 
sition from  the  Ledger  standpoint,  beginning  at  the  top  of  the 
page,  where  Earle   &  Co.  Dr.  is  already  written,    and   supply 
To  Sundries  thus : 

Jan'y  5.  To  Sundries,        1,        500.00. 

Then  mark  it  posted. 

48.  Open   Bills  Payable  account  half-way  down  page  8;  then 


170 

read  the  Journal  entry  again — Earle  &  Co.  Dr.  To  Sundries, 
$500,  which  means  they  are  debtor  to  the  following  accounts  ; 
and  as  Bills  Payable  is  one  of  those  that  follow,  it  means  that 
Earle  &  Co.  is  debtor  to  Bills  Payable  for  the  $475  in  the  $500, 
and  for  that  reason  Bills  Payable  must  be  credited  by  Earle  & 
Co.  $475  thus,  on  the  credit  side  : 

Jan'y  5.  By  Earle  &  Co.,        1,        475.00. 

Mark  it  posted,  and  dispose  of  Discount  next,  turning  to  the 
account  already  open  on  page  9  in  the  Ledger,  making  the 
same  entry  on  the  credit  side  as  in  the  case  of  B.  P.,  except  in 
amount,  following  the  same  line  of  reasoning. 

49.  We  next  enter  more  sales  on  January  5,  by  charging  the 
same  four  customers  with  whom  we  already  have  accounts,  be- 
ginning on  page  2,  in  Sales-book  with  W.  C.  Browning  <fe  Co., 
repeating  their  terms  and  address,  duplicating    third    entry  on 
page   86,    $201.90.      Charge   Miller  &  Bros,    next,  duplicating 
second  entry  on   page  88,  $190.40.     Charge  Davis  &  Co.  next, 
duplicating   fourth  entry  on    page  86,  $166.45.     Charge  J.  C. 
Brown   &   Co.,  duplicating  second  entry  on    page  86,    $137.25, 
completing  the  day's  sales.     Draw  red  lines  between   each  entry 
same  as  before,  then  across  the  outside  column,  which  must  be 
added,   showing   total  amount  of   sales  to   date,  which  must  be 
carried  forward  to  next  page. 

50.  Then  post  the  four  entries  just  made  in  the  Sales-book, 
making  the  following  entry  on  the  debit  side  of  W.  C.  Brown- 


ing &  Co.'s  account : 


3/90,        2,        201.90. 


And  the  same  in  the  other  three,  except  in  terms  and  amounts. 
We  ditto  (thus  „)  nearly  everything  but  figures,  which  must 
be  repeated.  We  always  repeat  the  day  in  the  Ledger,  but 
never  the  month,  which  we  do  not  even  ditto. 

50  J.  Follow  order  of  reading  No.  4  on  page  6,  also  read  pages 
84  and  85  about  Terms.  The  transactions  given  in  the  First  and 
Second  lessons  are  the  same,  as  those  in  the  Miniature  Set,  "but 
m  the  next  sixteen  lessons  they  differ,  hence  cannot  he  traced 
through  the  forms  given. 


FOUKTH    LESSON.  171 


FOURTH   LESSON. 

51.  We  reopen  our  daily  Cash-book  on  January  5,  by  bringing 
down  the  balance  on  the  debit  side  placing  the  figures  $1718.75 
in  the  amount  column.     Do  not  repeat  Jan'y^  but  simply  put  5 
in  the  column  for  days,  which  must  not  be  repeated  with  any 
entry  made  on  the  debit  side,  but  opposite  first  entry  on  credit 
side  we  put  5  in  the  column  for  days  on  that  side  after  which 
it  is  not  to  be  repeated. 

52.  Assume  that   Davis  &  Co.   pay   by  check   their    bill    of 
January  1,  less  §%*  which  they  would  be  entitled  to  by  paying 
within  ten  days.     The  money  received  we  enter  on  debit  side  of 
Cash-book,  thereby  charging  Cash  account   and  crediting  their 
account  thus : 

„     Davis  &  Co.,  BillJan'yl.  209.75. 

Less  6$  =  12.58.     197.17. 

Extending  the  net  amount  $197.17  into  the  sundries  column 
on  the  line  with  the  discount,  that  is,  last  line  used;  in  fact,  all 
the  money  we  receive  must  be  entered  in  the  sundries  column 
unless  received  for  a  special  account  having  a  special  column. 
The  6$  we  lose,  and  enter  it  in  the  Journal  according  to  first 
Form,  charging  Discount  because  we  lose  it,  and  crediting 
Davis  &  Co.  by  it  because  we  allowed  it  to  them.  Then  explain 
thus : 

Allowed  them  6$  dis.  on  bill  Jan'y  1,  209.75. 

53.  Assume  that  we  indorse  the  check  just  received  and  de- 
posit it  in  our  bank,  charging  the  bank  on  the  fly-leaf  as  before 
thus  : 

Jan'y  5.  Deposited  197.17. 

Placing  the  figures  in  the  column  at  once  under  last  balance,  be- 
cause there  is  but  one  check,  draw  a  line  and  add,  thereby  charg- 
ing the  bank. 

54:.  We  then  make  out  a  check  to  the  order  of  Sanford  &  Co., 
and  give  it  to  them  in  payment  of  their  bill  of  January  1,  $500, 


172  A  THREE  WEEKS'  COURSE  OF  PRACTICE. 

Jess  6$  which  we  would  be  entitled  to  by  paying  thus  promptly. 
First  make  a  memorandum  on  the  stub  as  follows: 

No.  2.  Jan'y  5,  1888. 

Sanford  &  Co. 
Bill  Jan'y  1,  500.00 

Less  6g.     30.00  470.00. 

When  the  check  is  gone  the  money  is  supposed  to  be  drawn 
from  the  bank.  We  therefore  deduct  the  amount  from  balance  in 
bank  by  bringing  the  figures  into  the  column  on  the  left,  under 
last  balance,  locating:  them  on  a  direct  line  with  the  figures  in 

S  O 

the  stub  from  which  the  check  was  detached,  thereby  prevent- 
ing unnecessary  crowding  of  the  matter,  and  giving  the  bank 
credit,  showing  at  a  glance  the  present  condition  of  the  bank 
accounts. 

55.  We  then  credit  Cash,  and  charge  Sanford  &  Co.  with  the 

O 

amount  of  check,  by  entering  it  on  credit  side  of  C.  B.  thus: 

5        By  Sanford  &  Co.,  Bill  Jan'y  1,  500.00 

Less  Q%=  30.00      470.00. 

The  net  amount  must  be  extended  into  the  sundries  column. 
In  fact,  all  the  money  paid  out  must  be  entered  in  the  Sundries 
column  unless  paid  for  a  special  account.  The  6$  we  gain  in 
this  settlement  and  enter  it  in  the  Journal,  charging  Sanford 
&  Co.,  and  crediting  Discount  according  to  First  Form,  and  ex- 
plain thus : 

Allowed  us  Qfc  Dis.  on  bill  Jau'y  1,  500.00 

56.  Any  little  items  of  expense  paid  in  cash  during  the  day, 
such  as  car-fare,  telegrams,  expressage,  etc.,  could  be  jotted  down 
roughly  on  a  small  memorandum-book,  which  we  will  call  Petty 
Cash  (not  the  kind  alluded   to  on  page  53  as   Two  Cash-books 
unnecessary),  and  at  the  close  of  the  day  charge  the  amount  to 
Expense  in  the  special  Expense  column  on  credit  side  of  C.  B. 
Thus,  assuming  it  be  $3.50  to-day. 

,,     Expense — see  Petty  Cash,  3.50. 

57.  Assume  that  W.  S.  Jenkins,  a  salesman,  draws  $25,  part 
of  what  we  owe  him.     We  charge  his  account  and  credit  Cash 
thus : 

„     W.  S.  Jenkins,  On  account,  25.00. 

Placing  the  figures  in  the  Sundries  column. 


FOURTH    LESSON.  173 

58.  The  last  thing  at  the  close  of  the  day  would  be  to  figure  up 
the  amount  of  retail  sales  for  the  day,  which  result  would  be  -as- 
certained by  adding  the  various  amounts  of  all  the  memorandums 
of  sales  turned  in  with  each  cash  sale  during  the  day  and  kept  on 
file  until   the  day's  work  was  over,  and  enter  them  in  a  lump, 
charging    Cash  and  crediting  Mdse.  in  the  following  entry  on 
debit  side  of  C.  B., 

Mdse.,  retail  Sales,  25.00, 

extending  the  figures  into  the  special  column  for  Mdse.  That 
would  be  the  last  entry  on  Cash-book  every  day ;  then  we  prove 
our  Cask. 

59.  In  proving  the  Cash  each  day  henceforth,  five  questions 
will  arise : 

1st.    How  much  cash  did  we  have  to  begin  with  ? 

2d.    How  much  have  we  received  during  the  day? 

3d.    How  much  would  we  now  have  if  we  had  not  paid  out  any  ? 

4th.  How  much  have  we  paid  out? 

5th.  How  much  have  we  now  on  hand  ? 

The  answers  are  as  follows :  We  had  to  begin  with  the 
balance  left  over  last  day,  and  we  received  and  added  to  it  during 
the  day  the  amounts  found  in  the  Sundries  and  Mdse.  columns; 
hence  we  would  have  the  total  of  all  the  figures  on  debit  side  for 
that  day  if  we  had  not  paid  out  the  various  amounts  found  in  the 
Sundries  and  Expense  columns  on  credit  side,  the  total  amount  of 
which,  when  deducted  from  the  total  of  the  debit  side,  will  show 
what  we  now  have  on  hand,  and  must  agree  with  the  amount  in 
bank,  as  per  Check-book,  and  the  currency  in  the  drawer,  which 
must  be  counted.  See  paragraph  18. 

60.  In  counting  the  imaginary  money  in  the  drawer  five  more? 
questions  arise : 

1st.    How  much  had  we  in  the  drawer  to  begin  with  ? 

2d.    How  much  have  we  put  in  the  drawer  during  the  day  ? 

3d.  How  much  would  we  have  in  the  drawer  now  if  we  had 
not  taken  any  out  ? 

4th.  How  much  have  we  taken  out? 

5th.  How  much  have  we  still  remaining  therein? 

The  answers  are  as  follows:  We  had  in  the  drawer  this  morn- 
ing just  what  we  discontinued  with  lust  night,  a  memorandum  of 


174  A  THREE  WEEKS'  COURSE  or  PRACTICE. 

which  we  made  in  red  ink  in  the  space  for  explanations  in  closing 
the  Cash-book  last  night.  And  we  have  put  into  the  drawer  dur- 
ing the  day  the  amount  of  retail  sales  and  any  small  amounts  we 
may  have  received  from  time  to  time ;  hence  we  would  have  in 
the  drawer  the  total  of  all  the  amounts  mentioned  if  we  had  not 
taken  out  for  expenses  the  amount  found  in  the  Expense  column. 
Also  $25  for  Mr.  Jenkins  and  any  other  small  amounts  we  may 
find  on  the  credit  side  of  C.  B.,  for  which  we  never  gave  a  check, 
as  the  Check- book  would  indicate.  We  may  also  have  taken 
money  out  of  the  drawer  and  deposited  it  in  the  bank,  which  the 
Check-book  would  also  show. 

61.  After  proving  the  Cash  we  write  up  the  daily  Cash  (see 
paragraph  20),  then  'balance  it  (see  paragraph  21),  then  close  it  for 
the  day  (see  paragraph  22). 

62.  Then  post  the  cash  transactions  for  the  day,  beginning  on 
the  debit  side  as  a  rule  (see  last  part  of  paragraph  23).     Turn  to 
Davis  &  Co.'s  account  on  page  7  in  the  Ledger,  and  credit  their 
account  by  Cash,  thus: 

Jan'yS,  By  Cash,        2,        197.17, 

and  mark  it  posted  in  the  usual  way. 

63.  Read  the  next  entry  on  that  side  of  C.  B.,  thus,  Cash  Dr. 
to  Mdse.,  $25,  which  means  Mdse.  must  be  credited  by  Cash 
$25,  but  not  at  present,  as  it  is  in  a  special  column,  it  will  be 
credited  at  the  end  of  the  month  in  the  final  footing  of  that 
column  ;  hence  we  pass  it  for  the  present  and  check  it  thus, 
(  I/ ),  showing  it  had  not  been  overlooked,  but  considered  and 
passed  purposely. 

64.  We  post  the  credit  side  by  turning  to  Sanford  &  Co.'s  ac- 
count and  entering  on  the  debit  side, 

Jan'y  5,  To  Cash,        3,        470.00, 

in  accordance  with  the  theory  explained  in  paragraph  24,  which 
see. 

We  read  the  next  entry  and  pass  it  (see  paragraph  25). 

We  read  the  last  entry  on  that  side  of  C.  B.  and  open  account 
with  W.  S.  Jenkins  on  page  10,  and  charge  it,  by  entering  on  Dr. 
side, 

Jan'y  5,  To  Cash,        3,        25.00. 


FIFTH   LESSOR  175 

65.  Keud  the  first  entry  in  the  journal  to  be  posted,  then  turn 
to  Discount,  page  9  in  the  Ledger,  because  that  is  the  first  account 
in  the  entry;  repeat  the  proposition  from  the  Ledger  point  of 
view,  beginning  at  top  of  the  page  where  Discount  Dr.  is  already 
written,  and  supply  To  Dams  &  Co.  by  entering  thus  on  debit  side 
of  Discount, 

5        „        Davis  &  Co.,        1,        12.58. 

Then  turn  to  Davis  &  Co.'s  account  on  page  7  and  reverse  the 
proposition  thus,  Dams  <&  Co.  must  be  credited  by  Discount, 
and  enter  on  the  credit  side : 

5        ,,        Discount,  1,        12.58. 

66.  Read  the  next  journal  entry  and  turn  to  Sanford  &  Co.'s. 
account  on  page  5,  proceeding  as  in  the  case  of  Discount  in  the 
foregoing  entry  and  write  on  the  debit  side  of  their  account, 

5        „        Discount,  1,        30.00. 

Then  turn  to  Discount  and  dispose  of  it  as  in  the  case  of  Davis  & 
Co.  in  last  entry  by  writing  on  the  credit  side, 
5        „        Sanford  &  Co.     1,        30.00. 

After  making  each  of  the  four  transfers  from  the  Journal,  the 
Ledger  page  must  be  entered  on  the  left  of  each  name  in  the  Jour- 
nal entry. 


FIFTH   LESSON. 

67.  Reopen  the  cash  on  January  12th  also  by  bringing  down  the 
balance  as  before.  We  assume  that  Miller  &  Bros.'  note  had  been 
offered  and  discounted  at  our  bank,  which  means  the  note  was 
iriven  to  them  and  that  they  gave  us  credit  by  its  present  worth. 
We  find  the  present  worth  by  calculating  the  discount  at  6$  per 
annum  on  its  face  value  for  the  unexpired  time,  that  is>  the  num- 
ber of  days  between  now  and  its  maturity.  We  find  the  maturity 
by  reference  to  Bills  Receivable  book.  Discount  and  Interest  are 
both  figured  the  same  way  in  business,  although  they  are  really 
different  results.  See  Interest  Rules,  pages  144  and  145. 


176  A  THREE  WEEKS'  COURSE  OF  PRACTICE. 

68.  Passing  the  money  to  our  credit  is  virtually  giving  it  to  us, 
as  we  can  draw  a  check  for  it  any  time  we  want  it.    We  therefore 
enter  the  money  received  for  the  note  in  C.  B.,  charging  cash  and 
crediting  Bills  Receivable  in  this  way  on  the  debit  side  of  C.  B.: 

Bills  Receivable,  Discounted  at  1st  Ntl.  Bk., 

Miller  &  Bros. '  Note,     128. 1 1 
@,Q%  for  22  days,  47       127.64 

extending  the  net  amount  in  the  Sundries  column.  Then  charge 
the  bank  account  on  stub  of  check  thus: 

Jan'y  12,  Proceeds  of  Note,  127.64, 

locating  the  figures  in  the  column  under  last  balance  and  adding 
them  thereto. 

69.  The  6#  for  22  days  we  lose  and  must  enter  in  the  Journal, 
charging  it  to  Interest  and  crediting  Bills  Receivable  in  the  First 
Form  of  entry,  and  explain  thus  : 

Q%  dis.  on  Miller  &  Bros.'  Note,  128.11,  for  unexpired  time,  22  days. 

The  6$  is  legitimately  discount,  but  having  adopted  Discount 
as  an  account  representing  the  percentage  we  deduct  from  the 
face  of  an  open  account  without  reference  to  time,  we  call  this 
kind  Interest,  as  it  is  a  certain  per  cent  per  annum  for  a  given 
number  of  days  on  cash  values ;  and  as  it  is  supposed  we  wish  to 
know  definitely  what  each  kind  amounts  to  during  the  year,  we 
must  keep  a  separate  account  for  each. 

We  then  make  an  extra  memorandum  on  Bills  Receivable  book 
in  the  space  for  remarks,  as  follows : 

Disctd  at  1st  Natl.  Bank,  Jan.  12. 

TO.  Assume  that  the  Wright  Mfg.  Co.  drew  on  us  at  sight  for 
$500,  part  of  what  we  owe  them,  and  that  their  draft  was  this  day 
presented  at  our  office  by  the  Ninth  National  Bank's  messenger, 
to  whom  (the  bankers)  they  sent  it  for  collection.  We  make  out 
a  check  on  our  bank,  payable  to  the  order  of  Ninth  National 
Bank,  for  $500,  the  amount  of  the  draft,  and  hand  it  to  the  mes- 
senger, first  making  the  following  memorandum  on  the  stub  from 
which  the  check  will  be  detached : 

No.  3.  Jan'y  12,  1888, 

Ninth  National  Bank, 
for  Sight  Draft  of 
Wright  Mfg.  Co.,  500.00, 


FIFTH   LESSON.  177 

deduct  it  from  the  bank  as  before  explained,  giving  the  bank 
credit;  then  enter  it  on  credit  side  of  Cash-book,  charging7 the 
amount  to  "Wright  Mfg.  Co.,  thus : 

12      By       Wright  Mfg.  Co.,  Sight  Draft,  500.00. 

71.  Assuming  it  to  be  Saturday  night,  and  therefore  pay  night 
for  the  employees,  we  hand  the  porter  $20,  also  the  office-boy 
$7  out  of  the  cash-drawer  for  two  weeks'  services.     We  charge 
the  full  amount  to  Expense,  and  credit  Cash  in  the  Expense 
column,  thus : 

„        Expense,  Porter,  2  weeks,  @  $10.00,  20.00 

Office  boy,  2  weeks,  @  $3.50,         7.00 

substituting  their  names  for  their  clerical  names. 

72.  If,  however,  we  had  many  employees,  we  would  keep  a 
pay  roll,  to  show  how  much  time  was  put  in  by  each  and  the 
amount  due  each.    The  total  amount  of  pay-roll  would  be  entered 
in  Cash-book  and  the  explanation  would  be : 

See  Pay  Roll. 

73.  If  part  of  the  employees  were  manufacturers,  the  pay  roll 
would  have  to  be  arranged  with  their  names  together  and  the 
names  of  the  clerical  help  together.    The  amount  paid  manufactur- 
ers would  be  charged  to  Mdse.  and  the  balance  of  the  pay  roll  to 
Expense.     If  only  a  few  employees,  however,  no  pay  roll  would 
be  necessary,  but  the  names  would  each  appear  in  the  C.  B.,  in  the 
space  for  explanations. 

Assume  that  Austin  Ross,  another  salesman,  draws  $25,  part 
of  what  is  due  him,  we  charge  his  account  and  credit  Cash,  same 
way  as  in  W.  S.  Jenkins'  case  on  the  5th. 

Assuming  the  day's  work  to  be  over,  we  must  enter  the  retail 
sales,  say  $27.50  (see  paragraph  58);  then  prove  the  cash;  then 
write  up  the  daily  Cash,  balance  and  close  it  for  the  day.  See 
paragraphs  20,  21,  22. 

74.  The  checks  all  having  been  torn  out  of  first  page  of  Check- 
book, we  write  opposite  last  balance, 

Carried  forward. 

Then  turn  over  the  stubs  from  which  the  checks  were  detached 
and  write  on  back  at  the  top  of  the  page, 

Brought  forward. 


178  A  THREE  WEEKS'  COURSE  OF  PRACTICE. 

The  amount  of  each  check  must  be  deducted  on  a  direct  line  on 
the  left  \vitli  the  figures  in  the  column  on  the  right,  so  that  the 
explanation  on  the  stub  will  explain  the  figures  on  both  sides ; 
furthermore,  it  prevents  unnecessary  crowding  of  the  matter.  If 
the  space  on  the  left  is  all  consumed  by  deductions  and  deposits 
before  the  checks  on  that  page  are  all  drawn,  the  remaining 
checks  must  be  deducted  on  next  page,  which  would  necessitate 
making  this  memorandum  opposite  the  deduction, 

Less  check  No.  — . 

75.  On  January  12  it  is  assumed   that   we   buy  a  job   lot  of 
collars  and  cuffs  amounting  to  $150  from   Clnett  &   Son,  with 
whom  we  have  no  account  on  the  books,  and  as  we  are  not  likely 
to  do  any  more  business  with  them  would  not  like  to  open   a 
ledger  account  for  one  transaction  ;  hence  we  settle  for  the  goods 
by  a  note  antedated  Dec.  26,  having  45  days  to  run.     We  record 
the  transaction  in  the  Journal,  charging  Mdse.  with  the  amount  of 
goods  received,  and  crediting  Bills  Payable  by  the  same  amount 
for  which  wre  issued  our  note,  according  to  First  Form  of  Jour- 
nal entry  ;  then  make  the  following  explanation  : 

Gave  Cluett  &  Son  our  note  of  Dec.  26  at 
45  days  in  settlement  of  their  bill  on  file. 

Then  make  an  extra  memorandum  on  B.  P.  book. 

76.  If  somebody  with  whom  we  have  no  account  on  the  books 
should  buy — say  $100  worth  of  goods — of  us,  and  give  us  their 
note  in  settlement,  we  would  not  make  Sills  Receivable  Dr.  to 
Mdse.  in  the  Journal,  as  our  Commercial  College  professors  would 
say  should  be  done,  and  which  would  be  the  theoretical  way  of 
doing  it ;  but  practical!}7  or  in  a  business  way  we  dispose  of  it  by 
charging  the  buyer  on  our  Sales-book,  which  would  insure  the 
proper  credit  in  Mdse.  at  the  end  of  the  month  as  we  have  seen, 
and  having  charged  the  buyer  in  Sales-boo'k  would  of  necessity 
cause  him  to  be  charged  in  the  Ledger  also,  but  his  name  would 
be  carried  under  the  Petit  Accounts  Receivable.     See   Ledger 
Accounts  Elucidated,  pages  110  and  111.     Then  we  would  enter 
the  note  received  in  the  Journal  according  to  First  Form,  charg- 
ing Bills  Receivable  and  crediting  the  buyer,  making  a  duplicate 
of  entry  and  explanation  as  in  paragraph  39,  except  in  name  and 
amount  of  course,  and  omitting  discount  in  the  explanation,  and 
then  we  would  make  an  extra  memorandum  on  B.  R.    book  of 


FIFTH   LESSON.  179 

the  note.  This  method  of  disposing  of  it  requires  more  entries, 
but  it  is  the  proper  way  to  do  it,  for  the  potent  reason  that  the 
buyer  may  want  the  same  kind  of  goods  again  and  write  us  to 
duplicate  the  bill,  in  which  event  we  would  naturally  look  for  the 
mutter  in  the  Sales-book,  where  we  keep  a  detailed  account  of  all 
large  lots  of  goods  sold. 

77.  If  we  did  not  find  it  in  the  Sales-book,  we  would  naturally 
conclude  that  it  had  not  been  entered  at  all,  not  thinking  to  look 
in  the  Journal,  and  would  therefore  be  subjected  to  the  embarrass- 
ing necessity  of  having  to  write  to  our  customer  to  return  the 
original  bill,  so  we  could  see  what  kind  of  goods  he  had,  as  we 
could  find  no  record  on  our  books  that  he  had  ever  been  charged 
with  anything.      To  avoid  multiplicity  of  ledger  accounts,  which 
would  give  us  no  more  ideas  than  we  gather  from  a  few,  we  will 
hereafter  charge  the  same  four  customers  with  whom  we  already 
have  accounts,  repeating  their  terms  and  address,  and  endeavor 
to  have  a  variety  of  amounts  in  each  account. 

78.  We  then  post  the  day's  transactions  from  all  three  books, 
beginning  with  debit  side  of  C.  B.,  proceeding  according  to  the 
theory  advanced  in  last  part  of  paragraph  23. 

Turn  to  Bills  Receivable  account  in  the  Ledger,  and  en.ter  on 

credit  side 

Jan'yl2  By  Cash,        2.  127.64. 

and  mark  it  posted.  Read  the  next  entry  and  pass  it  for  the 
reason  stated  in  paragraph  63. 

79.  Turn  to  Wright  Mfg.  Co.'s  account  and  enter  on  debit 

side, 

Jan'y  12  To  Cash,        3,  500.00. 

Read  next  entry  and  pass  it  as  explained  in  paragraph  25.  Open 
Austin  Ross'  account  in  same  page  with  W.  S.  Jenkins,  and  post 
it  the  same  way  in  every  particular.  (See  Appendix,  question 
366.) 

80.  Read  the  next  Journal  entry  to  be  posted,  and  turn  to 
Mdse.  account  and  enter  on  the  debit  side 

12  ,,    B.  P.,      1.  150.00. 

Then  turn  to  Bills  Payable  account  and  say,  Mdse.  having  been 
debited  to  B.  P.  $150,  B.  P.  must  be  credited  by  Mdse.  $150, 
and  enter  on  the  credit  side 

12  „    Mdse.,      1.  150.00. 

Do  not  foriret  the 


180  A  TIIKEE  WEEKS'  COUKSE  or  PEACTICE. 

81.  Post  from  the  Sales-book,  proceeding  according  to  instruc- 
tion in  paragraph  50,  entering  in  the  four  Ledger  accounts  the 
date,  Sales-book  folio,  and  amounts,  dittoing  (thus  „  )  the  u  To" 
and  "  Mdse."  repeating  the  terms  in  each  case.  This  would 
complete  the  work  of  January  12th,  and  the  Fifth  Lesson. 


SIXTH   LESSON. 

82.  January  15. — Reopen  the  daily  cash  by  bringing  down  the 
balance.     Assume  that  we  want  to  use  $1000  in  cash  to-day,  which 
will  require  about  all  we  have.     In  order  not  to  be  short  of  funds 
we  negotiate  a  loan  of  $500  at  our  bank ;  in  other  words,  we  borrow 
that  much  from  the   bank,  which  they  would  be  glad  to  accom- 
modate us  with  if  we  were  a  responsible  and  reliable  firm, — but 
they  would  require  our  note  for  the  amount,  deduct  their  per- 
centage for  the  use  of  it,  and  give  us  credit  by  the  net  proceeds. 
The  rate  of  percentage  would  be  fixed  according  to  the  risk  they 
considered  they  were  taking  in  lending  the  money.     The  less  the 
capital  of  the  borrowers  the  greater  the  risk  of  the  lenders,  and 
the  greater  the  rate  of  interest  that  would  be  charged. 

83.  Giving  us  credit  is  the  same  thing  as  if  they  gave  us  the 
money.     We  therefore  enter  the  amount  of  money  received  for 
the  note  on  the  debit  side  of  C.  B.,  charging  Cash  and  crediting 
Bills  Payable  thus : 

,,     Bills  Payable — Borrowed  of  1st  Nat'l 

Bk.  on  our  note  500.00 

for  30  days  @  §%  2.75  497.25 

We  then  make  an  extra  memorandum  on  the  stub  of  Check-book 
charging  the  bank  with  the  money,  thus : 

Jan'y  15.  Proceeds  of  Note.  497.25 

adding  the  amount  to  last  balance  in  bank.  We  also  make  an 
extra  memorandum  on  Bills  Payable  book  of  the  note  given  to 
the  bank. 

84.  The   discount,   amounting   to    $2.75,   we  lose;    therefore 


SIXTH    LESSON.  181 

charge  it  to  Interest  and  credit  Bills  Payable  in  the  Journal,  First 
Form  of  entrv,  making  the  following  explanation  : 

t/   /  ^*  £5  r 

6$  dis.  on  our  note  at  30  days  in  favor  of  First  National  Bank  for  500.00. 

85.  The  $2.75  being  a  deduction  is  in  that  sense  discount,  but 
being  a  penalty  we  pay  for  the  use  of  the  money,  is  in  that  sense 
interest.     We  call  it  discount  in  the  explanation  because  it  is 
discount,  but  charge  it  to  Interest  in  the  Journal  entry  because 
that  is  the  name  by  which  we  identify  that  kind  of  discount.  See 
paragraph  69.     In  figuring  the  discount  on  notes  the  three  days 
of  grace  must  be  included,  making  the  time  of  a  thirty-day  note 
really  thirty -three  days. 

86.  Assume  that  we  receive  a  letter  from  Wright  Mfg.  Co., 
requesting  us  to  send  them   $500  on  account;    also  requesting 
us  to  pay  for  their  account  John  Smith  $300,  and  John   Jones 
$200.     First  thing  upon  receipt  of   the   letter  in  the  morning, 
before  we  become  busy  during  the  day,  would  be  to  make  out  a 
check  to  their  order  for  $500,  and  deduct  it  from  the  bank  ac- 
count.    Fill  out  the  stub  first,  thus : 

No.  4  Jan'y  15,  1888. 

Wright  Mfg.  Co. 
On  account,  500.00. 

Tear  out  the  check  and  deduct  it  as  before.  The  money  is  virtu- 
ally gone,  but  not  yet  entered,  and  will  not  be  until  we  have  made 
the  other  two  payments  for  them,  which  would  be  done  when- 
ever the  parties  call  for  it.  Suppose  that  John  Smith  calls  for 
his  about  noon.  We  make  out  a  check  to  his  order  for  $300, 
first  making  memorandum  on  the  stub  thus: 

No.  5.  Jan'y  15,  1888. 

John  Smith, 
On  account  of 
Wright  Mfg.  Co.,          300.00. 

Tear  out  the  check  and  give  it  to  him,  and  deduct  it  from  bank 
account  at  once,  but  do  not  enter  it  yet,  as  we  know  there  is  an- 
other pavment  to  be  made,  but  not  certain  it  will  be  made  to-day. 
We  leave  the  matter  open  until  the  close  of  the  day,  until  we 
find  out.  About  2  o'clock  in  the  afternoon,  just  before  time  for 
depositing,  we  suppose  John  Jones  calls  for  his  money.  We 


182  A  THREE  WEEKS'  COURSE  OF  PRACTICE. 

give  him  a  check  for  $200,  payable  to  his  order,  making  same 
kind  of  memoranda  in  on  stub  as  in  case  of  John  Smith,  and  de- 
ducting it  from  bank  account  to  see  how  much  we  have  left. 

The  day's  work  being  now  far  advanced  towards  the  close,  and 
knowing  of  no  other  payments  to  be  made  for  the  same  account 
as  the  last  three,  we  enter  the  amount  of  all  the  checks  drawn 
during  the  day  in  the  Cash-book  in  one  sum,  charging  the  Wright 
Mfg.  Co.  and  crediting  Cash  by  entering  thus  on  credit  side  of 
C.  B.: 

15    By  Wright  Mfg.  Co.— Check,  500.00 

John  Smith,  300.00 

John  Jones,  200.00  1000.00 

extending  the  total  into  the  Sundries  column,  thereby  having  but 
one  amount  to  post  instead  of  three  we  otherwise  would  have  by 
entering  each  check  soon  as  drawn.  It  is  not  at  all  necessary  to 
enter  checks  in  the  order  they  are  drawn,  but  those  given  for  the 
same  account  must  be  entered  together. 

87.  Enter  the  retail  sales  for  the  day,  charging  Cash  and  cred- 
iting Mdse.  as  usual, — say  $32.50,  also  enter  the  expense  for  the  day 
from  Petty  Cash  book,  say  $4.75,  charging  Expense  and  crediting 
Cash,  which  would  end  the  day's  work.     Then  prove  the  cash, 
write  up  the  daily  cash,  balance  and  close  it  as  explained  in  para- 
graphs 20,  21,  22,  59  and  60. 

88.  Assume  that  J.  C.  Brown  &  Co.  return  by  express  1  doz. 
No.  2  Shirts  which  are  damaged.     We  enter  it  in  the  Journal, 
First  Form,  charging  Mdse.  and   crediting  their  account  by  the 
amount  they  were  charged  for  the  shirts,  which  would  be  found 
by  reference  to  the  Sales-book,  and  explain  thus: 

For  1  doz.  No.  2  Shirts  returned  damaged. 

89.  Assume  that  Davis  &  Co.  write  to  us  declining  to  credit 
us  for  case  and  cartage  charged  to  them  on  last  three  bills,  which 
by  reference   to  the  Sales-book  we  find  amount    to    $4.       We 
credit  their  account  and  charge   Mdse.  with  the  claim  which  we 
allow,  in  the  Journal,  First  Form*  and  explain  : 

Allowed  them  for  Case  and  Cartage  on  bills 
January  1    $1.50,  5th    $1.25,    12th    $1.25. 


SIXTH   LESSON.  183 

Notwithstanding  first  bill  has  been  paid,  including  the  $1.50,  it 
would  be  deducted  from  next  settlement.  (See  Appendix,  ques- 
tion 387.) 

90.  Post  the  entries  of  this  date,  beginning  with  the  debit  side 
of  Cash-book,  proceeding  as  explained  in  paragraph  23,  by  read- 
ing  first   entry   on   that   side.       We  turn  to  Bills  Payable  ac* 
count  in  the  Ledger,  page  8,  and  enter  on  Credit  side, 

15        „  Cash,  2,      497.25 

Read  the  next  entry  and  pass  it  (see  paragraph  63).  Read  the 
first  entry  on  credit  side  (see  paragraph  26) ;  then  turn  to  Wright 
Mfg.  Co.'s  account,  page  4  in  the  Ledger,  and  enter  on  the  debit 
side, 

15        „  „  3,      1000.00. 

Read  the  next  entry  and  pass  it  (see  paragraph  25).* 

Read  the  next  Journal  entry  to  be  posted,  and  turn  to  Mdse. 
and  enter  on  debit  side, 

15       „    J.  C.  B.  &  Co.,        2,      11.00. 

Then  turn  to  J.  C.  Brown  &  Co.'s  account,  page  6,  and  enter  on 
credit  side, 

Jan'ylS  By    Mdse.,  2,      11.00. 

91.  In  the  first  entry  on  the  credit  side  of  every  account  we 
write   "jSy,"   and  each  subsequent  entry  on  that  side  we  ditto 
the  ".Zfy,"  thus  („).    In  the  first  entry  on  the  debit  side  of  every 
account  we  write  "  To"  and  ditto  it  the  same  way  in  each  subse- 
quent entry  on  that  side.     Always  repeat  dates  and  folios. 

92.  Read  the  next  Journal  entry  and  turn  to  Mdse.  account 
again,  and  enter  on  debit  side, 

15        ,,         D.  &  Co.,  2,        4.00. 

Then  turn  to  Davis  &  Co.'s  account  and  enter  on  credit  side, 
15        „          Mdse.,  2,        4.00. 

This  would  complete  the  day's  work,  without  entering  anything 
on  Sales-book. 

*  Read  first  Journal  entry  to  be  posted  and  turn  to  Interest,  page  9,  and 
enter  on  the  debit  side  thus, 

15        "         B.  P.  1,        2.75. 

Then  turn  to  Bills  Payable,  page  8,  and  euter  on  the  credit  side  thus, 

15        "         Int.  1,        2.75. 


184  A   THREE   WEEKS7  COURSE   OF   PRACTICE. 


SEVENTH   LESSON. 

93.  January  18. — Assume  that  we  receive  a  letter  from  J.  C. 
Brown  &  Co.  enclosing  their  note  at   60   days  for  $220.32,  to 
settle  their  bill  of  January  1,  less  goods  returned,  also  less  4$  dis. 
Also  by  the  same  mail  a  letter  from  W.  C.  Browning  &  Co.,  en- 
closing their  note  at  90  days  for  $211.22,  to  settle  their  bill  of  Ja- 
nuary 1,  less  3#.     We  first  turn  to  J.  B.  &  Co.'s  account  in  the 
Ledger  to  see  the  amount  of  their  bill,  also  what  amount  of  goods 
they  had  returned.     Calculate  the  4$  on  the  difference,  and  find 
it  will  be  $9.18,  and  the  amount  of  their  note  to  be  correct  as 
stated.     Returned  goods  should  be  credited  at   the  price  they 
were  charged,  and  at  time  of  settlement  of  any  bill  deducted 
from  the  face  before  the  discount  is  deducted  ;  if  deducted  from 
the  net  amount  of  the  bill,  that  is,  after  discount  is  taken  off,  we 
would  lose  the  discount  on  the  return  goods;  in  other  words,  we 
must  not  consider  credit  items  at  the  long  or  gross  price   and 
debits  at  net  figures.     This  is  an  important  matter  to  be  remem- 
bered, as  many  picayune  merchants  often  try  to  take  that  advan- 
tage in  making  their  remittances,  and  unless  the  book-keeper  is  on 
theqwvive  much  loss  could  be  incurred  during  the  year.     We 
do  not  enter  it  until  we  have  also  audited  W.  C.  B.  &  Co.'s  ac- 
count in  the  same  way,  calculating  the  3$  dis.,  which  we  find  to 
be  $6.53,  and  the  amount  of  their  note  correct  also  as  stated ;  we 
then  make  a  record  of  both  settlements  in  the  Journal  at  one 
time,  charging  Discount  $15.71,  entering  both  items  one  above 
the  other  in  the  order  of  addition  just  after  the  name,  extending 
the  total  into  first  column  and   charging  Bills  Receivable  with 
total  of  both  notes,  $431.54,  giving  the  amount  of  each,  one  above 
the  other  in  the  same  order,  extending  the  total  into  first  column, 
and  crediting  J.  C.  Brown  &  Co.  $229.50,  the  amount  of  their 
note  and  the  4$,  also  crediting  W.  C.  Browning  &  Co.  $217.75, 
the  amount  of  their  note  and  the  3$. 

94.  This  would  require  an  entry  of  the  Fourth  Form,  as  we 
have  two  debtors  and  two  creditors.     We  state  the  debtors  first, 


SEVENTH   LESSON.  185 

giving  Bills  Receivable  the  preference  of  first  location,  because  it 
is  the  larger  of  the  two;  then  write  J.  C.  Brown  &  Co.  in  the  po- 
sition of  the  first  credit  account  in  the  entry,  making  the  follow- 
ing explanation  after  their  name  before  entering  the  other  cred- 
itor : 

Received  their  note  of  Jan'y  1st  at  60  days  in  settle  ment  of  bill  Jan'y  1  st, 
240.50,  less  goods  returned  11.00  =  229.50,  less  4$  dis.  =  9.18  =  220.32. 

Then  enter  W.  C.  Browning  &  Co*'s  name  in  the  same  way, 
making  the  following  explanation  after  their  name  : 

Received  their  note  of  Jan'y  1st  at  90  days  in  settlement 
of  bill  Jan'y  1st,  217.75,  less  3$  dis.  =  6.53=  211.22. 

It  requires  an  explanation  after  each,  because  the  details  as  to  fig- 
ures are  different.  We  make  an  extra  memorandum  on  Bills 
Receivable  book  of  the  two  notes  received. 

95.  We  then  transfer  J.  C.  Brown  &  Co.'s  note  for  $220.32  to 
Wright  Mfg.  Co.  in  part  settlement  of  our  indebtedness  to  them, 
charging  their  account  with  its  present  worth  at  the  rate  of  6$ 
dis.  for  the  time  the  note  has  yet  to  run.     We  refer  to  the  B.  R. 
book  to  see  when  the  note  falls  due,  and  count  the  actual  number 
of  days  between  now  and  then,  which  we  find  is  (13  more  days  ir 
January  and  29  in  February  (leap  year)  and  four  in  March)  46 
days.     The  interest  on  $220.32  @  6$  per  annum  is  $1.68,  which, 
deducted  from  face  value  of  note,  $220.32,  shows  its   present 
worth  to  be  $218.64. 

96.  We  make  a  record  of  having  transferred  the  note  to  them 
in  the  Journal,  Third  Form,  charging  their  account  $218.64,  and 
charging  Interest  account  $1.68  because  we  lose  it,  and  crediting 
Bills  Receivable  account  by  the  full  amount  of  the  note  given 
out.     Make  the  following  explanation  : 

Transferred  and  charged  to  them  on  account  J.  C.  Brown  &  Co.'s 
note  220.32  less  Qf0  dis.  =  1.68  =  218.64,  for  unexpired  time  46  days. 

Also  make  the  following  memorandum  on  Bills  Receivable  book 
in  the  space  for  remarks  : 

Transf'd  to  W.  Mfg.  Co.  Jan'y  18. 

97.  Assume  that  we  have  an  invoice  of  goods  for  $1500  from 
Wright  Mfg.  Co.,  also  an  invoice  for  $500  each  from  Earle  &  Co. 


186  A  THREE  WEEKS'  COURSE  OF  PRACTICE. 

and  San  ford  &  Co.,  all  of  which  have  been  properly  checked  and 
OK'd  by  the  receiving-clerk,  which  would  signify  that  the  goods 
were  in  store.  We  also  have  marked  them  OK  as  to  extensions 
and  amounts,  hence  we  owe  them  that  much.  We  record  the 
facts  in  the  Journal,  duplicating  first  entry  in  the  Journal  except 
in  amounts,  making  the  same  explanation. 

98.  Assume  that  the  Wright  Mfg.  Co.,  to  whom  wre  are  now 
largely  indebted,  draw  on  us  at  10  days'  sight  for  $250,  and  that 
their  draft  was   this  day  presented  at  our  office  by  the  Ninth 
National  Bank,  to  whom  they  sent  it  for  collection.     We  would 
accept  it  by  writing  across  the  face  in  red  ink  : 

Accepted,  Jan'y  18th  1888. 

Payable  at  the  First  National  Bank. 

P.  A.  Wright  &  Co. 

(or  the  firm's  name,  whatever  it  may  be,  in  place  of  P.  A.  Wright 
&  Co.)  We  then  hand  it  back  to  the  messenger  who  presented  it, 
which  was  virtually  delivering  it  to  Wright  Mfg.  Co.  through  their 
authorized  agency.  The  facts  we  record  in  the  Journal,  First 
Form,  charging  Wright  Mfg.  Co.  and  crediting  Bills  Payable  ;  ex- 
plaining thus : 

For  their  draft  on  us  at  10  days'  sight, 
which  we  this  day  accepted  on  account. 

We  make  a  memorandum  on  Bills  Payable  book  also,  and  in  the 
space  for  time  we  write  10^/s,  which  would  distinguish  it  from  an 
ordinary  note.  (Eead  TENTH  AFTERTHOUGHT,  page  354.) 

99.  In  accepting  a  draft  the  firm  name  must  be  written  by  a 
member  of  the  firm,  as  the  book-keeper  would  not  be  permitted  to 
sign  the  firm  name  either  to  a  note,  acceptance,  or  check, — in  fact, 
to  any  obligation  that  would  be  binding  on  the  firm,  without  he 
lias  the  power  of  attorney,  a  written  authority  given  to  him  to 
act    for    the    firm.     He    can    of   course   sign    the   firm    name 
to   a   receipt  for  money,  or  anything  delivered   to  him   in    the 
interest  of  the  firm.     He  can  also  indorse  checks  for  deposit  in 
bank,  as  the  bank's  receiving  teller  is  not  supposed  to  know  the 
firm's  signature;  furthermore  it  would  be  presumed  to  be  right,  as 
nobody  would  be  likely  to  place  money  at  the  credit  of  another  un- 
less it  was  right,  as  it  could  in  no  wise  benefit  him,  as  the  money 


SKVKXTII    LESSON.  187 

could  be  drawn  only  by  presenting  a  check  at  bank  signed  by  the 
authentic  firm  name,  which  would  be  known  by  the  bank's~^zy- 
ing  teller.  He  could  not  indorse  a  check  in  the  firm's  name  for 
the  purpose  of  cashing  it,  however,  a  forcible  example  of  the  man- 
ner in  which  circumstances  alter  cases. 

100.  The  first  deposit  in  bank  must  be  made  by  a  member  of 
the  firm,  who  is  required  to  leave  the  j^rm's  signature;  that  is  to 
say,  he  will  write  in  a  large  register  (kept  by  the  bank,  containing 
signatures  of  every  depositor)  the  firm  name  as  it  must  always 
.be  written  on  checks,  which   if  otherwise  signed  would   not   be 
paid. 

101.  Having  no  more  entries  for  this  day,  we  post  those  already 
made.     Read  the  first  entry  on  the  Journal  to  be  posted — Sun- 
dries Dr.  to  Sundries — then  turn  to  Bills  Receivable  account,  as 
it  is  the  first  in  the  entry  (see  page  35),  and  reason  thus :  Sundries 
debtor  to  Sundries  means,   the  following  accounts  on  the  left  are 
debtors    to  Sundries,  that  is,  to   the   other    accounts  following 
on  the  right  of    the   entry;  and   as  Bills  Receivable  is  one  of 
those  following  on  the  left,  it  is  therefore  debtor  to  those  on  the 
right;  but  in   place  of  writing  each  one  of  them  in  posting  we 
write  Sundries,  which  includes  both.    Hence  WQ  enter  on  the  debit 
side  of  Sills  Receivable  account, 

18        „     Sundries,        2,        431.54. 

Turn  to  Discount,  and  reason  the  same  way  from  the  Discount 
standpoint,  and  enter  on  the  debit  side, 

18        ,,     Sundries,        2,        15.71. 

102.  J.  C.  Brown  &  Go's,  account  is  the  next  we  turn  to,  and 
reason    thus :    As   the   two  accounts  on  the  left  referred  to  as 
Sundries  are  debtor  to  those  under  the  word  Sundries,  on  the 
right,  which  includes  them,  their  account  is  for  that  reason  to  be 
credited  by  those  on  the  left ;  but  in  place  of  writing  each  one  of 
these  names  on  the  left  in   posting  we  write  Sundries  which  in- 
cludes both.     Hence  we  enter  on  the  credit  side  of  their  account 
now  under  consideration, 

18  Sundries,        2,        229.50. 


188 

Turn  to  W.  C.  Browning  &  Go's,  account  and  pursue  the  same 
line  of  reasoning:,  crediting  it  the  same  way, 

C"  c5  »/  " 

Jan'ylS        By    Sundries,  2,      217.75. 

103.  Read  the  next  entry  and  turn  to  Bills  Receivable  account 
again,  as  it  is  the  first  in  that  entry,  and  reason  as  in  the  case  of 
Miller  &  Bros.,  paragraph  44,  and  enter  on  the  credit  side, 
18        „     Sundries,  2,      220.32. 

Next  account  in  the  entry  is  Wright  Mfg.  Co.,  which  we  dispose 

of  the  same  as  in  the  case  of  Bills  Receivable  in  paragraph  45, 

and  for  the  same  reason  entering  on  the  debit  side  of  theiraccount, 

18        „     B.  R.  2,      218.64. 

We  dispose  of  Interest  account  next,  as  explained  in  the  case  of 
Bills  Receivable  just  cited,  entering  on  the  debit  side, 
18       „    B.  R.  2,       1.68. 

Read  the  next  entry,  and  post  it,  same  as  explained  in  paragraphs 
29,  30,  using  the  ditto  („)  marks  as  substitutes  for  each  word 
in  the  transfer. 

Wright  Mfg.  Co.  is  the  first  account  in  the  next  entry,  and  it  is 
disposed  of  by  entering  on  the  debit  side, 

18        „    B.  P.  2,      250.00, 

As  explained  in  paragraph  65  in  the  case  of  Discount. 
Bills  Payable  is  disposed  of  next  by  being  credited  thus, 

18        „     W.  Mfg,  Co.        2,      250.00, 
Same  as  it  was  disposed  of  in  paragraph  80. 


EIGHTH   LESSON. 

104.  January^. — Assume  that  P.  A.Wright  puts $500  more 
cash  into  the  business,  with  the  understanding  that  lie  is  to  be 
allowed  6$  per  annum  for  the  use  of  it.  We  charge  Cash,  and 
credit  his  account  same  as  before,  and  in  the  space  for  explana- 
tions we  write, 

Additional  Investment. 


EIGHTH    LESSON.  189 

105.  Assume  that  Miller  &  Bros.,  in  order  to  avail  themselves 
of  our  largest  discount,  which  is  6$  for  10  days  or  promplTcash, 
requested  us  to  draw  on  them  at  sight  four  days  ago  for  amount 
of  their  bill  of  January  5,  $190.40  less  6$;  we  would  have  made  a 
draft  therefore  for  $178.98  (for  form  of  draft  see  page  137),  and  sent 
it  to  the  First  National  Bank  in  St.  Louis,  enclosing  it  in  a  letter 
addressed  to  the  cashier  like  the  one  on  page  132,  thereby  consti- 
tuting him  our  agent  to  collect  the  money.     He  would  have   re- 
ceived it  two  days  later,  and  presented  it  at  Miller  &   Bros.' 
office  and  received  the  amount  drawn  for,  $178.98;  but  he  could 
not  attend  to  our  collecting  for  nothing,  and  would  deduct  50  cents, 
called  exchange,  from  the  money  and  sent  us  his  check  on  a  New 
York  bank,  which  would  be  exchange  on  New  York  for  the  bal- 
ance, $178.48,  which  we  would  have  this  day  received,  it  having 
required  at  least  four  days  from  the  time  we  made  the  draft  until 
we  received  returns.     No  entry  was  made  on  making  the  draft 
(see  answer  to  question   158  in  Appendix),  but  on  receipt  of  the 
money  we  make  an  entry  in  the  Cash-book  charging  Cash  and 
crediting  Miller  &  Bros.,  because  the  money  was  received  from 
them,  although  in  an  indirect  way.     Hence  our  entry  would  be 
on  the  debit  side  of  C.  B.  thus : 

„    Miller  &  Bros.— Bill  Jan'y  5th,        190.40 

Less  6$  11.42=178.98 

Less  Exchange,  50=178.48 

If  the  draft  had  been  for  a  large  amount  the  bank  would  have 
charged  -^  of  \<f>.  -The  discount  and  exchange  must  also  receive 
our  attention  later. 

106.  The  entry  first   made  on  C.  B.   will  probably  fill  that 
page.     If  so,  we  draw  a  red  line  across  all  the  columns,  and  add 
them  below  the  line  in  black  ink,  and  on  same  line  with  footings 
write  in  red  ink, 

Amounts  carried  forward, 

and  on  first  line  on  next  pnge  write  in  red  ink, 
Amounts  brought  forward, 

putting  the  figures  in  red  ink  also.  Head  both  sides  of  the  Cash- 
book  as  before,  also  all  the  columns,  and  on  the  first  line  below 
the  writing  in  red  ink,  we  repeat  Jarfy  20. 


107.  We  assume  that  Davis  &  Co.  also  requested  us  to  draw 
on    them    at   sight,  four   days   ago    for   their   bill    of  Jariy   5, 
$166.45  less  6#.     We  would  have  drawn  for  $156.47,  proceeding 
in  the  same  way  as  in  the  case  of  Miller  &  Bros.,  by  sending  the 
draft  to  cashier  of  First  National  Bank,  Cincinnati,  and  received 
returns  this  day  for  amount  drawn  for,  less  50  cents  exchanger, 
which  we  would   enter  on  the  debit  side  of  Cash-book,  charging 
Cash  and  crediting  Davis  &  Co.,  in  the  following  manner: 

„      Davis  &  Co.  Bill  Jan'y  5  166,45 

Less  6#  =  9.98  =  156.47 

Less  Exchange  50  =  155. 97 

The  items  of  Discount  and  Exchange  would  be  disposed  of 
last  thing  in  the  evening  or  first  thing  next  morning,  whereby 
we  would  be  enabled  to  include  in  the  same  entry  all  other  items 
of  differences  arising  in  the  cash  settlements  on  that  day.  It  is  by 
being  thus  methodical  as  to  the  time  of  attending  to  those  mat- 
ters that  we  do  not  forget  them,  otherwise  they  escape  our  at- 
tention for  the  time  being,  as  there  is  no  check-mark  admissible 
showing  they  have  been  properly  disposed  of.  If  perchance 
they  should  be  overlooked,  we  discover  it  later  in  settling  the 
account,  which  could  not  balance  by  that  much,  and  enter  it 
under  the  date  of  discovery. 

108.  In  looking  over  our  Cash-book  for  this  day  we  find  two 
items  of  Discount  and  two  items  of   Exchange    arising  in    the 
settlements  with  Miller  &  Bros,  and  Davis    &  Co.,  which  we 
will  enter  in  the  Journal  according  to  Fourth  Form.     We  charge 
Discount  $21.40,  and  if  we  wish  to  know  how  much  our  out-of- 
town  collecting  costs  us  in  a  year,  we  must  have  an  account  to 
represent  it;  hence  we  create  a  new  account  called  Exchange, 
which  we  will  charge  with  the  two  items  of  that  name,  placing 
one  above  the  other,  in  the  order  of  addition;  also  Discount  same 
order,  extending  the  total  into  first  column.    We  credit  Miller  & 
Bros,   by  both    the  Discount  and   Exchange  in  their  case,  also 
Davis  &  Co.  by  the  two  items  in  their  case. 

109.  After  Miller  &  Bros.'  name  in  the  entry  we  make  the 
following  explanation  : 

Allowed  them  6#  dis.  on  bill  Jan'y  5,  190.40 
=  11.42,  also  Exchange  for  collecting,  50c. 


EIGHTH    LESSON.  191 

Also  the  same  memorandum  after  Davis  &  Co.'s  name  except 
in  figures,  which  in  their  case  are  different. 

We  deposit  the  three  checks  received  to-day,  making  the 
same  kind  of  memorandum  on  Check-book  as  we  did  with  the 
first  deposit,  except  in  the  figures,  which  are  different,  but  must 
be  arranged  in  like  manner.  We  make  but  one  deposit  each  day, 
which  would  be  deferred  until  about  2.30  P.M.  so  as  to  include 
all  the  checks  that  come  in  during  the  day. 

110.  Suppose  J.  K.  Pine  has  sent  us  C.O.D,,  pursuant  to  our 
order,  $150  worth  of  goods.  We  make  out  a  check  to  his  order 
for  the  amount,  first  making  the  following  memorandum  on  stub  : 

No.  7.  Jan'y  20,  1888. 

J.  K.  Pine. 
Bill  on  file  150.00 

We  deduct  the  amount  from  bank-account  and  enter  it  on 
credit  side  of  Cash-book,  crediting  Cash  and  charging  it  to 
Mdse.  thus : 

20  By  Mdse.  J.  K.  Pine's  bill,  150.00 

If  we  sell  goods  C.O.D.  and  it  would  require  several  days  to 
get  returns,  we  would  charge  the  buyer  on  the  Sales-book 
same  as  a  regular  customer,  and  post  his  name  under  Petit  Ac- 
counts Receivable.  See  pages  110  and  111.  If  we  were  doing 
an  extensive  C.O.D.  business,  we  would  have  a  C.O.D.  account, 
and  manage  it  same  as  Petit  Accounts  Receivable.  If  we  expect 
returns  same  day  for  the  goods,  we  make  a  memorandum  (See 
Memorandum-book,  page  128)  until  we  get  the  money,  and  enter 
it  as  a  cash  sale  in  the  special  Mdse.  column  in  Cash-book. 

Suppose  we  hand  P.  A.  Wright  $50  out  of  the  cash-drawer, 
we  charge  it  to  his  account  and  credit  Cash,  thus : 

„     P.  A.  Wright  To  himself,  50.00. 

If  the  money  had  been  handed  to  another  person  for  him,  or 
he  had  instructed  us  to  pay  a  personal  bill  that  may  have  been 
presented  against  him,  we  would  charge  his  account  the  same 
way,  substituting  the  name  of  the  person  in  place  of  "  To  him- 
self''1 Not  to  do  so  would  be  a  bad  omission,  for  if  the  space  was 
left  blank  the  entry  would  likely  come  up  for  dispute  in  the 
future  when  the  circumstances  had  been  forgotten,  and  the 


192  A  THREE  WEEKS'  COURSE  OF  PRACTICE. 

cashier  could  never  satisfy  him  that  he  had  paid  the  money 
either  to  him  or  for  him. 

111.  We  enter  the  amount  paid  for  expenses  during  the  day 
as  per  Petty  Cash-book,  crediting  cash  and  charging  Expense — • 
say  $±.25 — as  we  did  before.     Also  enter  the  retail  sales,  charg- 
ing Cash  and  crediting  Mdse.  as  usual,  say  $4:2.50. 

112.  Suppose  the  Wright  Mfg.  Co.  have  returned    the  note 
of  J.  C.  Brown  &  Co.  which  we  transferred  to  them  January 
18,  stating  they  could  not  use  it  to  advantage.     We  must  there- 
fore make  a    counter  entry  to  the    one  we  made  on    the  18th, 
crediting  their  account  by  the  amount  we  charged  them  for  the 
note,  and  crediting  Interest  with  same  amount  it  was  charged 
with  before,  because  in  this  case  we  recover  that  which  we  then 
considered  lost,  and  charge  Bills  Receivable  with  the  amount  of 
the  note,  which  will  require  an  entry  in  the  Journal,  Second  Form / 
then  make  the  following  explanation  : 

For  J.  C.  Brown  &  Co.  i  Note  220.32,  which  we 
transferred  to  them  on  a/c  Jan'y  18,  returned  to  us. 

Then  duplicate  the  original    memorandum  on  Bills  Eeceivable 
book  that  was  made  when  the  note  was  first  received. 

113.  Assuming  that  we  have    received  another  lot  of   goods 
from  the  Wright  Mfg.  Co.  amounting  to  $500.00,  also  the  same 
amount  each  from  Sanford  &  Co.  and  Earl  &  Co.,  we  dispose  of 
it  in  every  way  the  same  as  we  did  in  the  other  two  instances  of 
the  same  kind. 

114.  If  in  posting  the  entries  of  this  date,  we  are  bothered  to 
know  how  to  proceed,  refer  to  previous  entries  of  the  same  kind 
and   dispose  of  them  the  same  way,  entering  the  date  on  the 
Ledger  in  every  transfer  made  to  it,  also  the  folio  of  the  book 
from  which  it  was  made,  dittoing  all  other  words  if  they  are  the 
same  as  those  used  in  the  last  transfer. 

115.  There    is    a    new  account  to  be  opened  for  Exchange, 
which  we  locate  near  the  bottom  of  page  9,  on   which  the  Dis- 
count and  the  Interest  account  have  been  opened,  repeating  the 
Dr.  on  the  left  and  Or.  on  the  right.     It  will  be  debited  same  as 
Discount  (see  paragraph  101). 

116.  In  the  first  entry  in  every  account  on  the  Ledger  on  both 


NINTH   LESSON.  193 

sides,  in  fact  the  first  entry  in  every  book,  tha  year  and  the  month 
must  both  be  given,  but  neither  must  be  repeated  on  the  same 
page.  Each  succeeding  month  and  year  must  also  be  stated  on 
all  the  books  and  in  every  Ledger  account. 


NINTH   LESSON. 

117.  January  26. — Suppose   that   we   have   received   by   the 
same    mail   a   remittance    from    J.  C.  Brown  &  Co.  and  W.  C. 
Browning  &  Co.  to  settle  their  bills  of  January  5,  less  6$,  W.  C. 
Browning  &  Co.  having  included  in  their  check  $100  which  they 
request  us  to  hand  to  Dougan  &  Co.  for  their  account.     We  turn 
to  each  of  their  accounts  in  the  Ledger  to  see  the  amount  of  their 
bills,  and  find  the  former's  to  be  $137.25,  6%  of  which  is  $8.23, 
and  their  check  would  be  $129.02.     The  latter's  biU  we  find  to  be 
$201.90,  6$  of  which  is  $12.11,  and  their  check  would  be  $289.79, 
providing  they  had  remitted  correctly.     We  enter  each  check  on 
the  debit  side  of  Cash-book,  crediting  each  firm  by  its  respective 
check,  making  same  kind  of  explanation  after  J.   C.  Brown  & 
Co.'s  entry  as  in  the  case  of  Davis  &  Co.,  paragraph  52;   but  in 
W.  C.  Browning  &  Co.'s  case  the  entry  and  explanation  would  be 
as  follows : 

„     W.  C.  Browning  &  Co.,        Bill,  Jan.  5,  201.90 

Less  6&  12.11  =  189.79 

For  Dougan  &  Co.,  =  100.00  =  289.79' 

Many  book-keepers  would  have  entered  only  the  money  be- 
longing to  us,  omitting  the  last  line  in  the  explanation,  taking  no 
notice  of  the  $100  for  Dougan  &  Co.  further  than  to  hand  them 
the  money,  which  would  be  decidedly  incorrect,  as  our  books 
should  show  the  full  transaction,  and  the  full  amount  received 
from  any  firm  should  appear  in  their  account.  When  we  pay  the 
money  to  Dougan  &  Co.  we  will  charge  W.  C.  B.  &  Co.  with  it. 

118.  The  two  items  of  6^  we  lose,  and,  therefore,  charge  the 
total  to  Discount  $20.34,  and  credit  J.  C.  Brown  &  Co.  by  the 
item  allowed  them,  $8.23,  and  W.  C.  Browning  &  Co.  by  $12.11, 


194  A  TiiKEE  WEEKS'  COURSE  OF  PRACTICE. 

for  the  same  reason  requiring  a  Journal  entry  of  Second  Form. 
making  an  explanation  after  each  firm's  name,  like  the  one  in 
Davis  &  Co.'s  case,  paragraph  52. 

We  deposit  the  two  checks  in  bank,  making  a  duplicate  of  the 
memorandum  that  was  made  in  the  other  cases  where  two  checks 
were  deposited. 

119.  We  pay  by  check  both  San  ford  &  Co.  and  Earle  &  Co.  the 
amount  of  their  bills  of  January  18,  less  6$.   Each  bill  being  $500, 
-we  therefore  make  out  a  check  for  each  firm  for  $470,  first  mak- 
ing memorandum  on  each  stub,  like  the  one  in  paragraph  54;  then 
•enter  them  both  on  credit  side  of  C.  B.,  crediting  Cash  and  charg- 
ing their  account  in  the  same  kind  of  entry  and  explanation  for 
each  as  in  the  case  of  San  ford  &  Co.,  paragraph  55. 

120.  The  6$  we  make,  and  credit  Discount  by  the  amount  of 
both  items,  $60,  charging  Earl  &  Co.  and  Sanford  &  Co.  $30 
each,  because  they  each  allowed  us  the  same,  requiring  an  entry  of 
Third  Form  and  but  one  explanation  after  both  names,  like  the  one 
in  Sanford  &  Co.'s  case,  paragraph  55.     One  explanation  will  do 
for  both,  because  the  details  are  in  every  particular  the  same ;  if 
the  bills  had  been  of  different  dates  or  different  amounts,  or  the 
discount  had  been  different,  two  explanations,  one  after  each  firm's- 
name,  would  have  been  necessary  for  clearness. 

121.  We  hand  Dougan  &  Co.  $100  out  of  the  Cash-drawer 
and  charge  it  to  W.  C.  Browning  &  Co.,  on  credit  side  of  C.  B., 
thus : 

,,     W.  C.  Browning  &  Co.,  Dougan  &  Co.,  100.00. 

We  also  hand  the  porter  and  office-boy  their  pay  for  two 
weeks  and  charge  it  to  Expense  (see  paragraph  71),  also  entering 
the  amount  of  petty  expenses  for  the  day  by  writing  in  explana- 
tion column, 

See  Petty  Cash-book,  3.75, 

ivithout  repeating  Expense  or  dittoing  it. 

Enter  the  retail  sales  for  the  day,  charging  Cash  and  crediting 
Mdse.,  say  $47.50. 

122.  Assume  that  we  drew  on  Miller  &  Bros,  four  days  ago> 
by  their  permission,  at  15  days'  sight,  for  $100  on  account,  ana 
that  we  have  this  day  been  advised  by  the  bank  we  sent  it  to  for 


TENTH   LESSON.  195 

collection  that  they  accepted  it  on  the  24th.  We  record  the  facts 
in  the  Journal,  First  Form,  charging  Bills  Receivable  and  "credit- 
ing Miller  &  Bros.,  after  which  we  explain  thus, 

For  our    draft    on    them    at   15  days'  sight, 
which  they  accepted  on  the  24th  on  account. 

We  also  make  an  extra  memorandum  on  Bills  Receivable  book, 
stating  the  time,  (Read  TENTH  AFTERTHOUGHT,  page  354.) 

15  d/s, 

for  the  reason  before  explained,  and  in  the  space  for  remarks  we 
make  a  pencil  memorandum,  thus, 

In  the  hands  of  First  National  Bank,  St.  Louis,  for  collection, 

so  as  not  to  lose  sight  of  it. 

123.  Make  four  more  entries  on  the  Sales-book,  charging  the 
same  four  customers  :  W.  C.  Browning  &  Co.,  $121.85,  dupli- 
cating Miller  &  Bros',  first  bill;  Davis  &  Co., $175. 90, duplicating 
W.  C.  Browning  &  Co.'s  bill  of  5th;  Miller  &  Bros.,  $124.25, 
duplicating  J.  C.  Brown  &  Co.'s  bill  of  5th;  J.  C.  Brown  &  Co., 
$140.45,  duplicating  Davis  &  Co.'s  bill  of  5th,  omitting  the  item 
for  No.  4  Shirts  in  each.  Repeat  their  terms  and  address. 

Post  from  all  three  books,  according  to  suggestion  in  para- 
graph 114. 


TENTH   LESSON. 

124.  January  31. — Reopen  the  daily  Cash-book.    Assume  that 
we  received  a  check  from  Davis  &  Co.  for  $100  on  account.   We 
would  enter  it  on  debit  side  of  C.  B.,  crediting  their  account,  and 
the  explanation  would  be  simply. 

On  Account 

Deposit  the  check  in  bank  and  add  it  to  the  bank  account. 

125.  By  referring  to  our  Bills  Payable  book,  which  we  should 
do  every  day,  we  notice  our  acceptance  of  $250  is  due  to-day,  and 
being  payable  at  our  lank,  it  would  be  presented  there  and  paid 
by  the  bank,  with  our  funds  on  deposit  there ;  hence  we  must 

4 


196  A  THREE  WEEKS'  COURSE  OF  PRACTICE. 

give  the  bank  credit  by  the  amount  of  the  acceptance  by  making 
the  following  memorandum  on  same  side  where  we  enter  deposits  :: 

Jan'y  31,  Less  acceptance  due  to-day,  250. 

"Less"  always  means  to  be  deducted. 

126.  We  credit  Cash  and  charge  Bills  Payable  account  because 
we  receive  our  note  in  exchange  for  cash,  hence  the  following 
entry  on  credit  side  of  C.  B., 

31.  By  Bills  Payable,  Acceptance  due  to-day,  $250. 

127.  We  start  Austin  Ross  on  the  road  as  travelling  salesman,, 
and  give  him  $200  in  cash  to  pay  his  expenses.     We  give  him 
$100  out  of  the  drawer  and  a  check  for  $100.     The  advantage  in 
giving  him  a  check  for  part  of  the  money  is  in  the  fact  that  the 
check  would  not  be  used  until  he  had  used  all  the  ready  money 
lie  had,  which  would  last  him  two  weeks  or  more  and  carry  him 
far  out  West,  when  he  could  then  cash  the  check  with  some  of 
our  customers  by  presenting  proper  credentials,  showing  he  was 
our  agent.    During  that  time  the  money  would  be  in  bank  at  our 
credit  and  subject  to  our  use.     At  the  time  of  making  out  the 
check  we  deducted  it  from  the  bank  account  to  keep  it  straight. 
We  could,  therefore,  apparently  overdraw  our  bank  account  $100 
and  yet  not  be  overdrawn. 

128.  We  credit  Cash  and  charge  $200  to  Austin  Ross'  Travel- 
ling Account,  which  will  be  a  new  account,  meaning  our  money  in 
his  hands  for  travelling  expense  purposes.    In  the  space  for  expla- 
nation we  write, 

100.00  100.00 

"    A.  Ross,  Trav.  Acct.,     Check,  Currency, 

placing  the  figures  directly  over  each  word,  and  extend  the  total; 
into  the  Sundries  column.  If  lie  required  more  money  during 
the  trip,  we  send  it  to  him  and  charge  same  account,  and  upon 
his  return  it  would  be  an  easy  matter  to  find  out  how  much  had 
been  sent  to  him  to  be  accounted  for,  by  having  such  an  account. 

129.  It  would  be  wrong  to  charge  it  to  the  account  already 
opened  in   his  name,  which  would  mean  his  money ;  besides,  it 
would  reduce  the  credit  of  interest  he  would  be  entitled  to  on, 


TENTH   LESSON.  197 

whatever  average  balance  there  may  be  at  his  credit  upon  closing 
e'v  books  at  the  end  of  the  year. 

130.  Enter  the  expense  for  the  day  as  per  Petty  Cash  book, 
^"editing  Cash  and  charging  Expense,  say  $4.25. 

Also  enter  the  retail  sales  for  the  day,  charging  Cash  and  credit- 
ing Mdse.,  say  $52.50.  Prove  the  cash  balance  and  close  it  as 
before. 

131.  Being  at  the  end  of  the  month,  it  is  assumed  that  we  have 
balanced  and  closed  the  daily  Cash-book  every  day  during  the 
month.  Hence  we  must  lay  it  aside,  as  it  were,  by  disregarding  the 
•figures  in  the  Amount  columns,  and   take  up  the  monthly  cash 
and  see  how  much  we  have  received  during  the  entire  month,  by 
-adding  Mdse.  and  Sundries  column  on  debit  side,  on  proof  sheet. 
Also  see  how  iruch  we  have  paid  out  during  the  month,  by  add- 
ing the  Expense  and  Sundries  column  on  credit  side,  noting  the 
result  on  proof  sheet,  and  if  all  the  additions  are  right  the  differ- 
ence between  the  debit  and  the  credit  side  will  agree  with  our 
last  daily  balance. 

132.  We  close  the  monthly  cash  by  producing  the  line  that 
extends  across  main  part  of  the  book  across  the  Mdse.  and  Ex- 
pen.se  columns  only;  the  footing  of  the  Mdse.  and  Expense  column 
on  next  line  are  extended   into  the  two  Sundries  columns  on  the 
same  line;  then  we  rule  across  the  two  Sundries  columns  on  that 
line  and   add  each   below  the  line,  also  extending   it    into   the 
Amount  columns,  which  we  balance  thus  in  red  ink  : 

„        Balance— Carried  to  Feb'y  1st.  337.07 

Then  rule  a  single  line  across  the  Amount  column  on  both  sides 
on  same  line  with  the  balance,  and  on  the  next  line  draw  a  double 
red  line  from  the  Month  column  on  each  side  across  the  page, 
thereby  closing  the  book  in  its  entirety. 

133.  We   explain    the   footings   of   the   Mdse.   and   Sundries 
columns  on  the  debit  side  in  the  following  manner: 

1/31  To  Mdse.  Total  Retail  Sales  227,50     227.50 

,,    Sundries.      Total  Receipts  4402.82 

The  figures  on  the  line  with  retail  sales  we  identify  in  posting  as 


198  A  THREE  WEEKS'  COURSE  or  PRACTICE. 

Mdse.,  and  the  final  footing  of  Sundries  column  we  identify  & 
Cash. 

134  We  explain  the  footings  of  the  Expense  and  Sundries 
columns  on  the  credit  side  in  the  following  entries: 

1/31  By  Expense.  Total  Cash  Expense  110.75   110. 7? 

,,    Sundries.  Total  Disbursements  4065.75 

We  identify  the  figures  in  the  Expense  column  as  Expense,  and 
the  final  footing  of  the  Sundries  column  we  identify  as  Cash  also 
in  posting. 

The  figures  1/31  in  the  date  column  mean  from  the  first  to 
the  thirty-first. 

135.  In  posting  the  Cash  for  the  31st  we  have  to  open  a  new 
account  in  the  Ledger  called  A.  Hoss*  Travelling  Account,  and 
enter  on  the  debit  side  thus : 

Jan'y  31,  To  Cash,        5,       200.00 

We  also  have  our  first  entry  on  the  debit  side  of  Bills  Payable 
account  under  this  date,  as  it  is  the  first  note  we  have  paid ; 
hence  this  entry  : 

Jan'y  31,  To  Cash,        5,       250.00 

136.  The    footings    of    the   Mdse.,    Expense    and    Sundries 
columns  must  also  be  posted.     We  credit  Mdse.  account  in  the 
Ledger  by  its  footing,  thus: 

Jau'y  1/31,  By  Cash,        4,       227.50 

We  then  open  Cash  account  in  the  Ledger  on  page  2,  arid  carry 
the  footing  of  the  Sundries  column  on  the  left  to  the  debit  side 
of  the  Cash  account,  thus  : 

Jan'y  1/31,     To  Sundries,        4,     4402.82 

137.  Open  an  account  for  Expense  on  page  2  in  the  Ledger 
also,  and  post  the  footing  of  that  column  on  the  debit  side  of  the 
Expense  account,  thus: 

Jan'y  1/31,  To  Cash,        5,       110.75, 


TKNTH   LESSON.  199 

and  the  footing  of  the  Sundries  column  on  the  right  we  carry  to 
the  credit  side  of  the  Cash  account,  thus: 

Jan'y  1/31,  By  Sundries,        5,       4065.75. 

138.  We  make  a  charge  against  Davis  &  Co.  on  Sales-book 
under  this  date  to  close  it  for  the  month;  duplicate  next  to  the 
last  entry  on  page  89,  omitting  case  and  cartage,  $1.25,  as  they 
decline  to  pay  it,  $213.25.     Rule  a  red  line  on  next  line  below 
the  entry,  terminating  at  the  first  column.     Being  at  the  end  of 
the  month,  we  draw  a  line  across  the  outside  column  on  the  same 
line  with  last  amount,  add  that  column  on  next  line,  and  opposite 
the  final  footing  write,  (see  question  438  in  Appendix,) 

Total  Sales  in  January. 

Then  on  next  line  draw  a  double  red  line  across  the  page,  begin- 
ning under  the  word  "total,"  simply  as  a  matter  of  underscoring- 
the  remarks. 

We  post  the  final  footing  of  Sales-book  on  the  credit  side  of 
Mdse.  in  this  way  : 

1/31        „     Sundries,        5,       2274.55. 

139.  On  the  lust  day  of  each  month  we  make  an  entry  in  the 
Journal,  Second  Form,  crediting  the  two  clerks  with  whom  we 
have  a  Ledger  account  by  their  services,  $100  each,  also  crediting 
the  landlord  (J.  W.  Carpenter)  with  one  month's  rent  of  storer 
$125,  on  the  supposition  that  we  pay  him  quarterly,  and  charge 
the  whole  amount  of  the  three  credits  to  Expense,  $325.     After 
the  two  clerks'  names  we  make  the  following  explanation, 

For  services  rendered  in  Jan'y  as  per  agreement; 

then  enter  the  landlord's  name,  after  which  explain  as  follows: 
Rent  of  Store  for  Jan'y  as  per  lease. 

Draw  a  double  red  line  across  the  page  from  the  month  to  the 
first  column  on  the  right,  which  would  close  the  Journal  for  the 
month.  Journal  columns  are  never  added  unless  there  are  special 
columns  or  in  making  four-column  Trial  Balance. 

140.  When  we  agree  to  give  a  person  anything  we  credit  their 


200          A  THEEE  WEEKS'  COURSE  or  PRACTICE. 

account  by  it ;  but  when  we  actually  give  it  to  them  we  charge 
their  account  with  it.  In  a  bookkeeping  sense,  therefore,  agree- 
ing to  do  anything  is  just  the  reverse  of  doing  it.  For  example 
take  the  case  of  "W.  S.  Jenkins,  whom  we  agreed  to  give  $100 
per  month  for  his  services,  and  for  that  reason  we  credited  his 
account  with  $100 ;  but  as  we  gave  it  to  him  from  time  to  time 
his  account  was  charged  with  it.  Hence  bookkeeping  sense  and 
common  sense  are  in  this  case,  as  in  many  others,  greatly  at 
variance. 


ELEVENTH   LESSON. 

141.  Having  closed  the  three  books  of  original  entry  and  carried 
the  results  into  the  Ledger,  as  must  be  done  every  month,  we  will 
now  make  our  first  Trial  Balance,  usual  form,  for  an  explanation 
of  which  see  pages  90  and  91. 

We  first  go  through  the  Ledger  and  make  the  pencil  figures 
showing  the  condition  of  each  account,  according  to  instruction 
for  making  Trial  Balance,  pages  90  and  91 ;  then  go  through  it 
again,  transferring  the  results  to  the  Trial  Balance  Sheet  in  ink; 
and  if  it  does  not  balance  we  find  the  error  according  to  the  rules 
on  page  49. 

142.  If  you  do  not  find  the  error  after  applying  all  the  rules 
the  second  time,  you  can  compare  your  figures  to  those  in  the 
following  Trial  Balance,  which  will  show  the  condition  of  all 
the  accounts  if  you  have  made  your  entries  correctly. 

We  never  made  a  transposition  of  figures  in  our  twenty  years' 
experience.  They  are  errors  very  hard  to  find,  but  of  exceedingly 
rare  occurrence ;  hence  the  rules  usually  advanced  by  theoretical 
book-keepers  for  finding  errors  are  not  very  practicable.  The 
phrase  "  Red  Ink  promises,"  descanted  upon  by  an  obscure  writer, 
and  which  you  may  sometimes  be  asked  about,  is  veritable  bosh ; 
a  solecism  indigenous  to  and  emanating  from  a  small  country 
town  in  the  West,  and  has  no  general  meaning. 


TWELFTH   LESSON. 


201 


TRIAL  BALANCE,   JANUARY  31sT,  1888. 


P.  A.  Wright, 

—  (name  of  junior  partner). 
Office  Furniture. 
Mdse. 

Wright  Mfg.  Co. 
Earle  &  Co. 
Sanford  &  Co. 
JVIiller  &  Bros. 
J.  C.  Brown  &  Co. 
W.  C.  Browning  &  Co. 
Davis  &  Co. 
JMlls  Receivable. 
Bills  Payable. 
Discount. 
Interest. 
Exchange. 
Expense. 
W   S.  Jenkins. 
A.  Ross. 

J.  W.  Carpenter. 
A.  Ross  Travelling  */c. 
Cash, 


245.00 
3812.95 


24.25 
140.45 
121.85 
285.15 
531.54 


3.22 

1.00 

435.75 


200.00 
337.07 


1450.00 
1000.00 


1250.00 
500.00 
500.00 


1125.00 
38.23 


75.00 

75.00 

125.00 


6138.23    6138.23 


TWELFTH  LESSON. 

Head  the  Journal  NEW  YORK,  FEBRUARY  1st,  1888. 

143.  In  this  our  second  month's  business,  we  introduce  a  four- 
column   Journal  by  ruling  two  special  columns  in  an  ordinary 
Journal,  one  for  Mdse.  Dr.,  and  the  other  for  Wright  Mfg.  Co., 
Or.     For  a  full  description  of  a  four-column  Journal,  its  use  and 
advantages,  see  pages  77  and  78. 

144.  The  entries  we  make  this  month  will  be  made  on  the 
same  principles  that  they  were  made  last  month  ;  the  only  differ- 
ence being  the  figures  will  be  located  in  different  columns  as  the 
case  may  require.     We  are  not  deviating  from  our  routine  already 
established,  but  we  are  developing  it  as  our  business  increases. 

145.  Suppose  we  receive  $2000  worth  of  goods  from  Wright 


202  A  THREE  WEEKS'  COURSE  OF  PRACTICE. 

Mfg.  Co.;  $500  each  from  Earle  &  Co.  and  Sanford  &  Co.r 
whose  bills  have  all  been  examined  and  OK'd  as  before  ex- 
plained. We  would  enter  them  in  the  Journal,  charging  Mdse. 
with  the  total  $3000,  in  its  special  debit  column.  Credit 
Wright  Mfg.  Co.,  $2000  in  their  special  credit  column,  and 
credit  Sanford  &  Co.,  also  Earl  &  Co.,  in  the  Sundries  credit  col- 
umn, requiring  an  entry  of  the  /Second  Form  •  after  which  we. 
explain  as  usual, 

As  per  bills  on  file. 

146.  We   also   introduce    two  more  special   columns   in    the 
Cash-book  this  month, — that  is,  the  two  Discount  columns.     The 
one  on  the  debit  side  of  Cash-book  being  for  discount  we  allow 
our  customers  and  therefore  lose,  and  for  that  reason  it  will  be  a* 
Discount  Dr.  column  ;  the  one  on  the  credit  side  of  C.  B.  is- 
for  discount  allowed  us  for  prompt  cash  settlements,  and  there- 
fore we  make  it,  and  for  that  reason  it  will  be  a  Discount  Cr. 
column. 

147.  Instead  of  making  Journal  entries  for  the  discount  arising- 
on  all  cash  transactions  as  we  did  last  month,  it  will  be  disposed 
of  by  being  entered  in  the  two  special  columns  in  C0  B.,  there- 
by saving  many  Journal  entries,  a  great  deal  of  posting,  and  much, 
valuable  Ledger  space. 

148.  The  figures  in  the  Discount  column,  on  either  side,  do- 
not  affect  the  Cash  in  any  way  (see  answer  to  question  98,  in. 
Appendix),  but  are  really  innovations  in  the  Cash-book  which, 
greatly  simplify  the  matter,  and  facilitate  our  work:  for  further 
explanations  in  relation  to  them,  see  pages  52,  53. 

149.  In  reopening  the  Cash-book,  February  1,  1888,  we  head  it 
same  as  last  month  ;also  head  the  columns,  which  will  in  every  way 
conform  to  our  miniature  Cash-book,  pages  64  and  65.     We  begin 
on  first  line  on  debit  side  thus, 

Feb'y  1,  To  Balance,  From  Jan'y  31,  337.07. 

locating  the  figures  in  the  Amount  column.  To  place  them  in- 
the  Sundries  column  would  be  wrong,  as  the  footing  of  that  col- 
umn each  month  will  show  the  amount  of  money  received  dur- 
ing the  month,  and  the  balance  brought  forward  from  last  month 


TWELFTH    LESSON.  203 

could  not  be  regarded  as  money  received  this  month  ;  hence  it 
must  be  kept  apart  from  the  receipts. 

150.  Assume  that  W.  C.  Browning  &  Co.  pay  by  check  their 
bill  of  26th  ult.,  $121.85,  less  6fc.     We  record  the  whole  settle- 
ment in  the  Cash-book,  charging  Cash  with  the  amount  of  check 
received,  charging  Discount  with  the  $%  which  we  lost,  and  credit- 
ing their  account  by  total  of  both  by  entering  on  the  debit  side 
of°C.  B.  as  follows : 

„   W.  C.  Browning  &  Co.,  Jan'y  26,  121.85    7.31    114.54. 

In  space  for  explanations  we  write  Jan'y  26,  $121.85,  which 
means  they  paid  that  bill.  We  place  the  $7.31  in  the  Discount 
column,,  which  means  less  that  much  discount,  and  the  differ- 
ence in  the  Sundries  column,  which  means  the  amount  they  paid. 

151.  Assume  that  J.  C.  Brown  &  Co.  also  pay  by  check  their 
bill  of  26th  ult.,  $140.45,  less  6$,  $8.42.     We  dispose  of  it  in 
every  way  the  same. 

We  deposit  the  two  checks  in  bank,  charging  the  bank  account 
as  usual. 

152.  As  fast  as  money  accumulates  on  our  hands  we  use  it  to 
the  best  advantage  in  paying  bills  not  yet  due,  and  thereby  avail 
ourselves  of  a  larger  rate  of  discount  than  we  would  be  allowed 
by  deferring  payment,  and  in  so  doing  we  offset  the  discount  we- 
lose  by  the  rapid  accumulation  ot  unsolicited  funds. 

153.  We  therefore  make  out  a  check  to  the  order  of  Earle  & 
Co.  for  $470  in  payment  of  their  bill  of  20th  ult.,  $500  less  6$,. 
first  making  the  necessary  memorandum  on  the  stub  from  which 
the  check  will  be  torn,  as  usual,  and  deduct  it  from  the  last  bal- 
ance in  bank. 

154.  We  record  this  whole  transaction  in  the  Cask-book,  credit- 
ing Cash  by  the  amount  of  check  given,  crediting  Discount  by 
the  6%  made,  and  charging  the  total  of  both  to  Earle  &  Co.,  in 
the  following  entry  on  the  credit  side  of  C.  B. : 

Feb'yl,  By  Earle  &  Co.,  Jan'y  20,  500.00    30.00    470.00. 

Arranging  the  explanations,  the  Discount  and  Cash  figures  on  the 
same  principles  just  explained  in  connection  with  the  entries  or> 
the  debit  side. 


204  A  THREE 'WEEKS'  COURSE  OF  PRACTICE. 

155.  Suppose  our  cartman  brings  in  his  bill  for  cartage  for  last 
month,  an  account  of  which  he  has  kept  on  a  small  pass-book 
which  has  been  checked  and  OK'd  by  our  shipping-clerk,  who 
would  also  have  an  account  of  the  number  of  loads  hauled  by 
the  cartman,  also  where  they  were  delivered,  making  it  an  easy 
matter  for  him  to  pass  upon  the  correctness  of  the  cartman's  ac- 
count ;  after  which  it  would  be  presented  to  and  paid  by  the  cash- 
ier, out  of  the  drawer  money,     We  credit  Cash  and  charge  Mdse. 
on  the  credit  side  of  C.  B.,  thus, 

„      Mdse.,  Cartage  for  Jan 'y,  7,50, 

placing  the  figures  in  the  Sundries  column,  because  we  have  no 
special  column  for  Mdse.  on  that  side. 

156.  The  student  would  naturally  conclude  that  it  should  be 
charged  to  Expense  and  not  Mdse.,  but  when  reminded  of  the 
fact  that  the  cartage,  just  paid  for  was  charged  to  our  customers 
on  the  bottom  of  their  bill  (Case  and  Cartage),  and  was  credited 
in  the  Mdse.  at  the  end  of  the  month  in  the  footing  of  the  out- 
side column,  which  included  the  cartage,  they  can  readily  under- 
stand  why  Mdse.  should  be  charged  with  its  cost,  as  it  has  been 
benefited  by  its  incurrence.     If  it  had  not  been  charged  to  our 
'Customers  and  thereby  sold,  as  it  were,  the  cost  of  carting  wrouid 
be  an  expense.     In  fact  the  number  of  loads  hauled  that  we  had 
not  charged  our  customers  for  should  be  charged  to  Expense 
-anyway,  to  be  just  with  the  Mdse.  account. 

157.  Suppose  we  receive  a  case  of  goods  from  the  "Wright  Mfg. 
Co.  on  which  there  is  $1.50  freightage  and  40  cents  cartage,  which 
we  pay  out  of  the  cash  drawer  to  the  Transportation  Co.'s  cartman. 
We  credit  Cash  and  charge  Expense,  by  making  the  following 
entry  on  the  credit  side  of  C.  B. : 

,,     Expense,  Freight,  1.50 

Cartage,    .40 

putting  the  figures  in  the  special  Expense  column. 

158.  To  the  inexperienced  it  would  seem  to  be  inconsistent  tc 
charge  cartage  to  Mdse.  in  one  instance  and  in  the  next  to  Ex- 
pense, but  in  the  latter  case  the  cartage  was  on  incoming  goods, 
and  is  an  outlay  of  money  that  will  in  no  way  be  recovered,  and 
is  therefore  really  an  expense  to  the  business. 


TWELFTH   LESSON.  205 

159.  The  next  item  of  cartage  may  be  charged   to  any  other 
account  that  may  have  been  benefited  thereby,  and  which  wrrnray 
consider  responsible  for  it;  hence  it  is  always  necessary  to  look 
into  the  previous  conditions,  or  causes,  of  such  things  to  be  able 
to  know  what  account  to  charge  them  to. 

160.  We  enter  the  retail  sales  for  the  day,  charging  Cash  and 
crediting  Mdse.  in  its  special  column,  as  usual,  say  $62.50.     Then 
prove  the  cash  for  the  day,  disregarding  the  figures  in  the  two 
Discount  columns,  as  they  do  not  represent  any  part  of  the  cash. 
Balance  and  close,  as  wre  have  done  each  day. 

161.  Charge  up  more  goods, — that  is,  charge    the  same   four 
customers  on  Sales-book  with  goods  supposed  to  have  been  sold  to 
them,  as  follows:  J.  C.  Brown  &  Co.,  $175.90;  W.  C.  Browning 
&   Co.,  $140.45  ;  Miller  &  Bros.,  $166.45 ;    and  Davis  &  Co., 
$240.50,  omitting  case  and  cartage  in  their  case ;  repeating  the 
terms  and  address  of  each  firm,  also  the  items  necessary  to  make 
the  amounts,  which  will  be  found  in  previous  charges  of  the 
same  amounts   to   other  customers ;  if   not,    create    them    from 
others. 

162.  In  posting  from  the  Cash-book  this  month,  we  must  con- 
sider the  figures  in  the  Discount  columns  in  connection  with  those 
in  the  Sundries  columns,  which  gives  us  an  entry  necessarily  af- 
fecting three  accounts. 

163.  For  instance,  our  first  entry  on  the  debit  side  affects  W.  C. 
Browning  &  Co.'s  account,  also  the  Cash  and  the  Discount  ac- 
counts; hence  our  first  double-entry  proposition  on  that  side  must 
be  stated  thus :  Cash  and  Discount  both  debtor  to  W  .C.  Browning 
<&  Co.,  which  means  they  are  debited  in  the  first  entry  in  positions 
whereby  they  will  be  debited  in  the  final  entry  at  the  end  of  the 
month,  and  for  that  reason  are  passed  for  the  present.    Then  turn 
to  W.  C.  Browning  &  Co.'s  account  in  the  Ledger  and  reverse 
the  proposition,  and  say  :  Their  account  must  be  credited  by  both 
Cash  and  Discount.     We  enter  on  the  credit  side  of  their  ac- 
count, as  follows : 

114.54       7.31 

Feb'y  1,        „     Cash,    Dis.,      6,      121.85 

writing  Cash  and  Discount  both  on  the  same  line,  with  the  figures 
directly  over  each  word,  and  extend  the  total  into  the  column. 


206 

164.  If  we  were  posting  the  two  items  from  the  Journal  we 
would  use  the  word  Sundries  in  place  of  the  two  words  Cash  and 
Discount /  but  as  they  are  differently  arranged  in  the  Cash-book, 
it  is  necessary  to  have  each  appear  in  the  transfer  to  enable  us  to 
retrace  them  to  the  original  entry. 

165.  We  read  the  next  entry  the  same  way,  and  turn  to  J.  C. 
Brown  &  Co.'s  account  and  credit  it  thus: 

13203        8.42 

Feb'y        „     Cash,     Dis.,      6,       140.45. 

arranging  the  figures  the  same  way  as  in  W.    C.    B.    &    Co.'s 
case. 

166.  We  read  the  next  entry  as  we  read  others  of  the  same 
kind  last  month,  and  pass  it  for  the  same  reason. 

167.  The  first  entry  on  the  credit  side  of  Cash-book  also  affects 
three  accounts,  Earle  &  Co.,   Cash  and  Discount.    Hence  our 
double-entry  proposition  must  be  stated  thus  :  Cash  and  Discount 
are  both  credited  by  Earle  &  Co.,  at  least,  they  are  credited  in  the 
first  entry,  and  will  be  in  the  final  entry  at  the  end  of  the  month. 
.So  they  are  passed  for  the  present,  and  Earle  &  Co.'s  account  con- 
idered  by  reversing  the  proposition  from  their  standpoint,  thus, 
Earle  &  Co.'s  account  must  be  debited  to  both  Cask  and  Discount, 
hence  we  write  on  the  Debit  side, 

470.00        30.00 

Feb'y       „     Cash,     Dis.,      7,      500.00 

disposing  of  the  figures  as  explained  in  the  case  of  W.  C.  Brown- 
ing &  Co. 

168.  We  read  the  next  entry  on  that  side,  Cash  credited  by 
Mdse.;  then  turn  to  Mdse.,  and  post  it  at  once,  because  it  is  not 
n  a  Special  Column.      Write  on  the  Debit  side, 

Feb'y        „     Cash,        7,       7.50. 

We  read  the  next  entry  and  pass  it  same  as  such  entries  were 
read  and  disposed  of  last  month. 

169.  We  then  read  the  first  entry  in  the  Journal,  Mdse.  Dr.  to 
Sunds.,  and  as  the  first  two  accounts  in  the  entry  are  in  special 
columns,  we  pass  and  check  them  thus,  f/,  and  post  the  next  two  in 
-every  way  the  same  as  last  month. 

We  also  post  from  the  Sales-book  the  same  way  as  before. 


THIRTEENTH   LESSON.  207 


THIRTEENTH  LESSON. 

170.  Reopen  the  Cash  on  February  2,  as  usual.     By  reference 
to  our  Bills  Payable  book  we  will  notice  that  our  first  note  is  due 
to-day,  and  the  amount  is  $475.00.    We  also  notice  that  it  is  pay- 
able at  First  National  Bank,  which  means  it  would  be  presented 
there  by  whoever  holds  it,  and  that  the  bank  will  pay  it  with  our 
funds,  providing  we  have  that  much  at  our  credit  in  bank  ;  and 
if  we  did  not  have  enough  to  meet  the  note,  the  bankers  would 
-advance  whatever  balance  was  necessary,  providing  they  considered 
us  good  for  the  amount  and  worthy  of  the  accommodation.    If  they 
did  not  so  consider  us   the   note  would  not  be  paid  by  them,  but 
would  be  presented  at  our  office. 

171.  We  presume  that  the  note  was  paid  on  presentation  at 
the  bank;  hence  we  must  give  the  bank  credit  by  the  amount  by 
deducting  it  from  last  balance. 

172.  On  looking  at  our  Check-book  we  notice  we  have  only  a 
small  balance  of  $41.89,  and  therefore  the  bank  had  to  advance 
$433.11  of  their  own  money  to  protect  the  note.     We  therefore 
make  the  following  memorandum  on  stub  of  the  Check-book, 

Feb'y  2,      Less  Note  due  to-day,  475.00 

placing  the  $475.00  under  last  balance;  draw  a  line  and  deduct  the 
upper  figures  ($41.89)  from  the  lower  ($475.00),  leaving  $433.11, 
which  must  appear  in  red-ink  figures,  and  will  mean  overdraft, 
or  due  the  bank.  Many  book-keepers  would  say:  "  I  can't  de- 
duct $475.00  from  $41.89,  consequently  will  make  no  memo- 
randum of  it  until  I  have  added  enough  to  the  bank  account  to 
pay  the  note ;  then  deduct  it." 

173.  That  would  not  be  satisfactory,  as  we  must  show  the  ac- 
tual condition  of  the  bank  account  every  time  it  is  changed,  be  it 
good  or  bad,  and  for  that  reason  we  deduct  the  note  at  once,  giv- 
ing us  a  minus  quantity,  as  it  were ;  then  we  can  see  how  much 
we  are  overdrawing,  and  therefore  know  what  amount  to  raise 
to  make  it  good. 


208  A  THREE  WEEKS'  COUESE  OF  PRACTICE. 

174.  Furthermore  \ve   would  receive  a  notification  from  the 
bank,   by   special    messenger,  that  our  account   was   overdrawn 
$433.11,  and  that  they  expect  us  to  make  it  good  before  3  o'clock, 
which  we  would  do  by  exchanging  checks  with  a  neighbor  possi- 
bly in  some  instances  and  depositing  it,  but  in  this  instance  we 
will  attend  to  it    in    another  way,  hereinafter    explained.     Ex- 
changing checks  would  not  change  the    condition   of  the  bank 
account  according  to  our  version,  but  would  set  it  aright  accord- 
ing to  the  bank's  version,  as  the  check  we  deposit  reaches  the 
bank  at  once,  whereas  the  check  wre  give  in  exchange  would  be 
deposited  by  our  neighbor  in  his  bank  and  would  have  to  go 
through  the  clearing-house  and  therefore  not  reach  our  bank  tin- 
til  next  day,  and  by  that  time  we  will  have  funds  there  to  meet 
it. 

175.  We  make  a  double  entry  in  the  Cash-book  of  having  paid1 
our  note,  crediting  Cash  and  charging  Bills  Payable,  because  we 
receive  our  note  back  when  we  pay  the   cash  for   it.     On  the 
credit  side  of  C.  B.  we  make  the  following  record  : 

2,        By  Bills  Payable,        Note  due  to-day,  475.00. 

We  also  mark  it  Paid  on  the  Bills  Payable  book  in  the  space 
for  remarks. 

176.  Our  bank  account  being  in  bad  condition,  we  must  raise 
the  money  to  make  good  the  overdraft,  and  having  $431.54  in 
other  people's  notes  on  hand,  according  to  our  Bills  Receivable 
book,  we  offer  them  for  discount  at  the  bank,  and  assume  that  the 
bank  accepts  and  passes  them  to  our  credit,  less  Qfc  discount  for  the 
unexpired  time.     See  THIRD  AFTERTHOUGHT  on  page  226. 

177.  We  must  see  if  the  amount  they  give  us  credit  by  is  cor- 
rect.   We  find  the  date  of  maturity  of  each  note,  also  the  amount 
of  each,  by  reference  to  the  Bills  Receivable  book;  then  calculate 
the  number  of  days  from  now  to  the  due  date  of  each  and  reckon 
the  6$  for  the  unexpired  time  on  the  amount  of  each  separately^ 
as  the  time  is  different,  and  find  the  total  discount  to  be  $3.27y 
which,  deducted  from  the  total  of  all  the  notes,  must  agree  with 
the  net  proceeds  by  which  the  bank  gives  us  credit  on  their  books, 
also  on  our  Bankbook  or  Pass-book,  fora  description  of  which  see 
page  58;  also  see  Miniature  Pass-book,  pages  124  and  125. 


THIRTEENTH   LESSON.  209 

We  charge  the  bank  on  stub  of  Check-book,  thus, 

Feb'y  2,  Proceeds  of  Notes,  428.27 

219.19 
209.08 

428.27 

178.  We  show  in  our  memorandum  the  net  amount  of  each 
note  on  the  supposition  that  each  has  been  entered  on  our  Pass- 
book by  the  discount  clerk ;  if  he  had  entered  only  the  total,  as 
is  often  the  case,  then  we  would  have  only  the  total  in  our  mem- 
orandum.   The  main  idea  is  to  have  ours  agree  with  his,  as  a  mat- 
ter of  convenience  in  checking  up  the  bank  account  when  the 
Pass-book  has  been  balanced  at  the  end  of  the  month.     We  place 
the  total  proceeds  in  the  column  under  the  red-ink  figures  and  de- 
duct'the  lower  (black-ink  figures)  from  the  upper,  which  will  leave 
a  small  overdraft  still,  which  must  also  appear  in  red-ink  figures. 

179.  We  take  $100  out  of  the  Cash-drawer  and  deposit  it  to 
cover  the  shortage  in  bank,  and  charge  the  bank,  thus : 

Feb'y  2,  Deposited  Currency,  100.00. 

If  it  had  been  a  check  instead  of  currency,  we  would  have  writ- 
ten simply  Deposited  100.00. 

180.  We  deduct  the  upper  amount  (in  red  ink)  from  the  $100 
deposited,  and  the  difference  will  indicate  the  balance  at  our  credit 
in  bank,  and  must,  therefore,  appear  in  black  ink,  restoring  the 
bank  account  to  its  normal  condition. 

181.  We  charge  Cash  with  the  amount  received  for  the  notes, 
and  credit  Bills  Receivable  by  making  the  following  entry  on  the 
the  debit  side  of  C.  B.: 

„    Bills  Receivable,  Discounted  at  First  Natl. 

Bank  the  following  Notes, 
211.22 
W.  C.  B.  &  Co.,         2.14     209.08 

220.32 
J.  C.  B.  &  Co.,          1.13     219.19    428.27 

182.  We  name  the  notes  by  the  initials  of  the  firm  and  place 
the  amount  of  each  just  above  the  line,  and  the  discount  of  each: 
on  the  line  under  the  amount  in  the  order  of  subtraction,  and: 


COURSE  OF  PRACTICE. 

extend  the  net  amount  of  each  near  the  Discount  column  in  the 
order  of  addition,  and  extend  the  total  into  the  Sundries  column. 

183.  The  Discount,  $3.27,  we  lose,  and  enter  in  the  Journal, 
charging  it  to  Interest  and  crediting  Bills  Receivable  by  it,  in  the 
First  Form  of  entry,  and  explain  thus : 

6?0  dis.  on  Notes,  see  C.  B.  6, 

referring  to  Cash-book  page  6,  where  we  have  the  details  already 
stated,  which  will  save  repeating  them. 

184.  "We  also  make  the  following  memorandum  on  the  Bills 
Receivable  book  under  Remarks: 

Disctd.  at  1st  Natl.  Bk.  Feb'y  2, 

including  the  two  notes  in  a  brace  (\). 

185.  Assume  that  the  man  who  furnishes  us  with  cases  that 
we  pack  our  goods  in  for  shipment  to  customers,  brings  in   his 
bill  for  cases  delivered  to  us  in  January,  say  $6.50.     We  pay  him 
out  of  the  cash-drawer,  credit  Cash,  and  charge  Mdse.,  for  the 
same  reason  we  charged  the  cartage  to  Mdse. 

186.  Assume  that  the  collector  for  the  gas  company  presents  his 
bill  for  gas  consumed  last  month.     We  pay  him  out  of  the  cash- 
drawer  also,  say  $4.50,  credit  Cash,  and  charge  Expense  in  the 
special  Expense  column* 

187.  Charge  Cash  and  credit  Mdse.  with  the  amount  of  retail 
sales  for  the  day  as  usual,  say  $67.50.     Prove  the  cash,  balance, 
and  close  it  for  the  day. 

188.  Assume  that  we  receive  $500  worth  of  goods  from  Wright 
Mfg.  Co.     We  enter  it  in   the  Journal,  charging  Mdse.  in  its 
special  column,  and  credit  their  account  in  their  special  column, 
neither  of  which  will  be  posted  at  present,  but  passed  and  checked 
thus  (  |/  )  on  the  left  of  each  name  where  the  post-mark  would  be. 

189.  We  make  no  entries  in  the  Sales-book  this  lesson,  but 
conclude  by  posting  from   the  Cash-book,  and,  as  there   are   no 
figures  in  either  Discount  column,  the  entries  will  all  be  read  and 
posted  same  as  last  month. 

*  It  will  be  noticed  that  this  payment  did  not  pass  through  petty  C.  B.  The 
amount  is  sufficiently  large  to  entitle  it  to  a  place  in  principal  C.  B  ;  further- 
more it  is  a  matter  we  may  want  to  refer  to,  and  it  is  easier  traced  when  thus 
•entered. 


FOURTEENTH   LESSON. 


FOURTEENTH  LESSON. 

190.  Eeopen  the  Cash-book  February  9. 

Assume  that  Miller  &  Bros.'  note,  which  was  due  on  the  3d, 
was  protested  for  non-payment,  which  means  they  could  not  pay 
it,  and  therefore  it  was  placed  in  the  hands  of  &  notary  public, 
who  would  notify  everybody  whose  name  appeared  on  the  note 
as  indorsers,  of  the  fact  that  it  had  not  been  paid  and  that  they 
were  looked  to  for  making  it  good.  The  notification  he  sends  to 
•each  is  called  a  Protest,  and  his  services  in  the  matter  usually 
•cost  $1.50,  which  is  called  protest  fee. 

191.  By  referring  to  our  Bills  Keceivable  book  we  will  see  that 
we  discounted  the  note  at  our  bank  January  12,  at  which  time 
we  indorsed  it — wrote  our  name  across  the  back  of  it — which 
meant  that  we  would  guarantee  the  bank  against  loss  in  the  event 
it  was  not  pai3 ;  hence  the  note  would  reach  us  again  via  First 
National  Bank,  to  whom  we  would  give  a  check  on  themselves 
for  the  amount  of  the  note,  including  protest  fees,  first  making 
the  following  memorandum  on  the  stub  from  which  the  check 
will  be  detached : 

No.  12.  Feb'y  9,  1888. 

First  National  Bank. 
For  Miller  &  Bros.  Note,  128.11 

Protest  fees  1.50     129.61 

192.  It  would  be  necessary  to  give  them  a  check,  which  would 
authorize  them  to  charge  our  account  with  the  amount,  which 
they  would  have  no  right  to  do  without  such  authority,  although 
they  hold  our  funds  on  deposit. 

193.  We  deduct  the  $129.61,  from  last   balance,   which  will 
again  overdraw  our  account,  hence  the  difference  must  appear  in 
red  ink  again. 

194.  We  enter  the  amount  of  check  in  the  Cash-book,  crediting 
Cash  and  charging  Miller  &  Bros.,  because  we  hold  them  account- 
able for  the  amount  we  advanced  to  meet  their  obligation.     We 
enter  on  the  credit  side  of  the  C.  B.  as  follows :  * 

9    By  Miller  &  Bros.       Note  due  3d,       128.11 

Protest  fees  1.50  129.61 

*  See  FIRST  AFTERTHOUGHT  on  page  226. 


212  A  THREE  WEEKS'  COURSE  OF  PRACTICE. 

195.  Assume  that  we  receive  a  remittance  from  Davis  &  Co. 
to  pay  their  bill  of  31st  ult.  $213.25,  less  60.     We  make  the  fol- 
lowing entry  on  the  debit  side  of  C.  B.: 

„    Davis  &  Co.,  Jan'y.  31,  213.25  -  12.79  =  200.46. 

disposing  of  the  matter  as  already  explained  in  the  case  of  W.  C. 
Browning  &  Co.,  paragraph  150. 

196.  We  would  deposit  the  check  and  charge  the  bank  ac- 
count with  it  as  usual,  which  would  settle  the  overdraft  and  leave 
a  balance  at  our  credit,  which  must  appear  in  black  ink  figures. 

197.  Assume  that  our  neighbor  and  friend,  A.  F.  Benson, 
solicits  the  loan  of  $100  from  us  for  42  days,  agreeing  to  pay  us 
7$  for  the  use  of  it.     We  will  lend  him  the  money  on  bank  prin- 
ciples ;  that  is,  we  will  require  his  note  for  the  amount,  deduct  the 
7$  for  42  days,  and  give  him  a  check  for  the  balance. 

198.  We  make  this  memorandum  on  stub  before  making  out 
check : 

No.  13.  Feb'y  9,  1888. 

A.  F.  Benson, 
Loaned  100.00 

42  days®  1%       .88  99.12 

Deduct  it  from  balance  in  bank 

199.  We  enter  it  in  the  Cash-book,  crediting  Cash  and  charg- 
ing Bills  Receivable  on  the  credit  side  of  Cash-book  thus :  * 

„  Bills  Receivable.   Loaned  A.  F.  Benson 
On  Ms  note          100.00 
42  days®  1%  .88  99.12 

Make  an  extra  memorandum  on  Bills  Receivable  book  according 
to  the  facts  in  the  case. 

200.  The    88  cents  we    make,    and   in  a  strict  sense  of    the 
word  is  discount,  but  we  credit  interest  by  it,  and  charge  it  to 
Bills   Receivable  in  the  Journal  according  to  First  Form,  and 
make  the  following  explanation  : 

1%  discount  on  A.  F.  Benson's  note  at  42  days  for  100.00. 

201.  In  the  explanation  we  must  allude  to  it  as  discount  to 
make  sense,  because  it  was  deducted  from  the  face  of  the  note, 
and  to  say  7$  interest  would  mean  that  it  was  added  to  the  face 

*  See  FIRST  AFTERTHOUGHT  on  page  226. 


FOURTEENTH   LESSON.  213 

By  referring  to  paragraph  69  you  find  a  full  explanation  of  the 
matter,  and  the  seeming  incongruities  reconciled. 

202.  Supposing  it  to  be  regular  pay-night,  we  hand  the  porter 
$20  and  the  office-boy  $7,  credit  Cask  and  charge  Expense,  same 
as  before  ;  also  enter  the  retail  sales  for  the  day,  charging  Cash 
and  crediting  Mdse.,  «ay  $72.50.      Prove  the  cash,  balance,  and 
close  it  as  usual. 

203.  Suppose  we  receive  an  apologetic  letter  from  Miller  & 
Bros.,  explaining  how  it  happened  that  their  note  went  to  protest, 
stating  that  Mr.  Miller  was  out  of  the  city  and  forgot  to  leave  a 
check  signed  with  the  book-keeper,  which  would  doubtless  be  a 
fabrication  from  whole  cloth,  designed  to  impose  on  our  credulity ; 
at  the  same  time  they  request  an  extension  of  30  days  for  the 
amount  of  protested  note,  and  enclose  a  new  note  with  interest 
added  at  6$  per  annum,  covering  the  protest  fees  also  ;  hence  the 
new  note  would  be  for  $130.26. 

204.  We  record  the  facts  in  the  Journal,  making  two  entries 

*  £5 

of  First  Form.  We  charge  Bills  .Receivable,  and  credit  Miller  & 
Bros.'  account  with  the  amount  of  note,  and  and  explain  as  follows : 

Received  their  note  of  Feb-'y  3d  at  30  days  in 
renewal  of  note  due  Feb'y  3,  128.11  including 
protest  fees  1.50  aud  30  days'  interest  @.  6$  =  .65. 

We  also  make  the  necessary  memorandum  on  the  Bills  Receiv- 
able book. 

205.  We  make  another  entry  charging  Miller  &  Bros,  and 
crediting  Interest  65c.,  which  we  made,  and  explain  as  follows: 

§%  interest  on  129.61  for  30  days ;  see  above  entry. 

The  6$  in  this  case  was  really  interest,  being  a  percentage  added 
to  the  face  cf  the  amount ;  hence  we  allude  to  it  as  interest  in  the 
explanation. 

206.  Our  Commercial  College  professors  (?)  would  never  have 
disposed  of  the  matter  in  two  entries,  but  would  have  made  one 
entry  charging  Bills  Receivable  with  the  amount  of  note,  credit- 
ing Miller  &  Bros,  by  $129.61   and   Interest   by  65  cents,  which 
would  have  been  theoretically  correct,  but  practically  incorrect,  as 
in  business  we  desire  that  Miller  &  Bros.'  account  must  show  the 
full  transaction,  which  it  would  not  do  if  we  had  credited   them 


214  A  THKEE  WEEKS'  COURSE  OF  PRACTICE. 

only  by  the  amount  they  were  previously  charged  with  in  the 
Cash-book,  in  which  case  the  interest  would  not  appear  in  their 
account,  nor  would  their  account  have  shown  the  amount  of  note 
received  from  them,  as  it  should. 

207.  Assume  that  we  receive  $800  worth  of  goods  to-day,  $450 
from  Earle  &  Co.,  $350  from  Sanford  &  Co.    We  enter  it  in  the 
Journal,  charging  Mdse.  in  its  special  column  $800,  and  crediting 
Earle  &  Co.  and  Sanford  &  Co.  in  the  Sundries  Cr.  column  by 
the  amount  of  their  respective  bills,  and  explain, 

As  per  bills  on  file. 

The  Mdse.  would  be  passed  in  posting  and  checked  as  usual,  and 
the  two  firms  would  be  dealt  with  same  as  before. 

208.  Charge   on    Sales-book   as   follows:  Davis  &  Co.    $213, 
duplicating  the  items  in  next  to  last  entry  on  page  89,  omitting 
case  and  cartage.     Charge  J.  C.  Brown  &  Co.  $204.50,  duplicat- 
ing last  entry  on   page  87.     Charge  W.   C.    Browning   &  Co, 
$206.10,  duplicating  first  entry  in  February  on  page 89.  We  would 
decline  to  ship  any  more  goods  to  Miller  &  Bros.,  since  they  failed 
to  meet  their  note. 

209.  We  conclude  this  lesson  by  posting  from  all  three  books 
as  usual.     The  first  entry  on  debit  side  of  Cash-book  will  read 
Cash  and  Discount  both  debtor  to  Davis  <&  Co.,  which  means,. 
their  account  must  be  credited  by  both  Cash  and  Discount.     On 
the  credit  side  of  their  account  we  write, 

200.46  12.79 

Feb'y9,     „        Cash.  Dis.,      6,      213.25, 

all  on  one  line,  arranging  the  figures  as  already  explained  in  a 
similar  case.     First  entry  on  credit  side  reads,  Cash  credit  by 
Miller  <&  Bros.  $129.61,  which  means,  their  account  must  be 
debtor  to  cash  $129.61.     We  therefore  write  on  the  debit  side, 
9,     „        Cash,  7,      129.61. 

210.  The  next  entry  reads   Cash  credit  by  Sills  Receivable 
$99.12,  and  therefore  Bills  Receivable  must  be  debtor  to  Cash 
$99.12.     Hence  we  write  on  the  debit  side, 

Feb'y9,     „        Cash,  7,        99.12. 

The  next  entry  on  both  the  debit  and  the  credit  side  we  read,  pass.. 

t/  j  L 

and  check  as  we  have  others  of  the  same  kind. 


FIFTEENTH   LESSOJX".  215 


FIFTEENTH   LESSON. 

211.  February  12. — Suppose  we  receive  a  4  mos.  note  from 
Davis  &  Co.   for  $240.50  to  settle  their  bill  of  1st  inst.     We 
would  enter  it  in  the  Journal,  First  Form^  charging  Bills  Receiv- 
able and  crediting  their  account  by  the  same  amount,  and  explain 
thus : 

Received  their  note  of  Feb'y  1st  at  4  mos. 

in  settlement  of  bill  of  same  date,  240.50. 

Also  make  the  usual  memorandum  on  Bills  Receivable  book. 

212.  Reopen    the    Cash-book   February   12.     Suppose   J.    C. 
Brown  &  Co.  desire  to  take  up,  in  other  words  call  in,  their  note 
which  they  gave  us  January  18,  $220.32,  and   for  that  purpose 
send   us  their  check  to  pay  it  19  days  before  its  maturity  (count- 
ing 29  days  in  February),  deducting  6$  per  annum  for  the  time 
yet  to  run. 

213.  By  reference  to  Bills  Receivable  book  it  will  be  noticed 
that  we  discounted  the  note  at  bank  February  2;  hence  we  would 
have  to  withdraw  it  from  the  bank,  which  would  cause   them  to 
lose  the  discount,  and  for  that  reason  they  would  not  like  to  give 
it  up  until  due,  but  would  do  so  as  a  matter  of  business  courtesy. 
We  would  give   them   the   note  just  received  from  Davis  &  Co. 
as  a  substitute  for  the  withdrawn  note  to  protect  them  from  loss, 
and  as  an  act  of  reciprocal  favor. 

214.  Would-be  professors  or  proprietors  of  so-called  business 
colleges  who  vaingloriously  style  themselves  presidents  ( ?)  would 
not  dispose  of  this  matter  properly  or  as  it  would  be  done  in  a 
business-like  way  by  a  practical  bookkeeper.      Their  first  thought 
would  be  to  journalize  it ;  the  burden  of  their  song  is  journalize 
everything.     They  deal  in  theories,  not  conditions  ;  in  shadows, 
not  substances.     They  have  no  knowledge  of  the  many  exigencies 
arising  in  business  which  their  theories  do  not  encompass,  a  fact 
that  has  brought  their  teaching  and  methods  into  disrepute  and 
desuetude. 


216  A  THREE  WEEKS'  COURSE  OF  PRACTICE. 

215.  The  money  received  from  J.  C.  Brown  &  Co.  we  enter 
at  their  credit  on  debit  side  of  C.  B.,  thus: 

J.  C.  Brown  &  Co.  For  iiote  due  Mar.  4.     220.32 

Less  6$  dis.  19  days  .69    219.63 

We  deposit  the  check  and  charge  the  bank  in  the  usual  way;  then 
make  out  a  check  to  the  order  of  the  bank  on  themselves,  first 
making  the  following  memorandum  on  stub : 

No.  14.  Feb'y  12, 1888. 

First  Natl.  Bank. 
For  J.  C.  B.  &  Co.'s  Note  220.32 
Less  6$  for  19  days  .69  219.63. 

Deduct  it  from  bank  account. 

216.  Then  enter  it  on  the  credit  side  of  Cash-book,  charging  it 
to  J.  C.  Brown  &  Co.,  thus : 

By  J.  C.  Brown  &  Co.        For  note  due  Mar.  4,  220.32 

Less  6$  for  19  days  .69        219.63. 

We  take  no  notice  of  the  discount  in  either  case,  as  one  offsets 
the  other,  and  in  no  way  affects  onr  Interest  account.  The  two 
•entries  of  Cash  also  offset  each  other,  and  neither  increase  nor 
diminish  our  balance;  but  it  is  entered  on  the  books  for  the  pur- 
pose of  having  J.  C.  Brown  &  Co.'s  account  show  the  transaction 
as  it  should. 

217.  The  note  we  give  the  bank  as  a  substitute  would  be  sub- 
mitted as  a  new  matter  for  discount,  and  the  proceeds  charged  to 
the  bank  account  in  the  usual  wray,  and  then  entered  on  the  debit 
side  of  Cash-book  at  the  credit  of  Bills  Receivable  in  the  follow- 
ing manner : 

12       ,,     Bills  Receivable.        Discounted  at  1st  Natl. 

Bank  D.  &  Co.'s  Note    240.50 
i  @  6^  113  days  4.53  235.97. 

218.  We  make  the  following  remarks  on  Bills  Receivable  book; 

Disctd.  at  1st  Natl.  Bank  Feb'y.  12. 

The  6$  ($4.53)  wre  lose,  and  enter  it  in  the  Journal,  charging 
Interest  and  crediting  Bills  Receivable,  and  explain  it  as  follows: 

Qfc  dis.  on  Davis  &  Co.'s  Note  240.50 
for  unexpired  time  113  days. 

219.  By  referring  to  the  Bills  Payable  book  we  notice  that  we 

*  See  SECOND  AFTKKTHOUGHT  on  pa<re  226. 


FIFTEENTH   LESSON.  217 

liave  another  note  due  to-day,  $150,  which  we  deduct  from  the 
bank  account,  because  it  would  be  presented  there  and  pai4-by 
the  bank  with  our  funds.  We  say,  on  back  of  stubs  where  we 
put  the  deposits, 

Less  note  due  to-day,     150.00 

220.  We  then  enter  it  on   credit  side  of  C.  B.,  charging  it  to 
Bills  Payable,  thus : 

Bills  Payable.  Note  due  to-day,     150.00 

and  mark  it  paid  on  Bill-book  under  Remarks. 

221.  Last  thing  in  the  day  we  credit  Cash  and  charge  Expense 
by  the  amount  in  Petty  Cash  book,  say  $4.50.     Also  charge  Cash 
and  credit  Mdse.  by  the  amount  of  retail  sales,  say  $75.     Prove, 
balance,  and  close  the  cash. 

222.  Charge  on  Sales-book  T.   Y.   Cannon,  a   transient   cus- 
tomer, $31.80,  duplicating  last  entry  on  page  88. 

Also  charge  A.  F.  Benson,  our  neighbor,  $18.50,  duplicating 

third  entry  from  bottom  of  p.  88,  adding  35  cents  to  cost  of  Cuffs. 

Charge  W.  S.  Jenkins,  our  salesman,  with  one-half  doz.  shirts, 

say 

at  cost,    8.50, 

also  one  doz.  collars, 

at  cost,    1.15,  9.65. 

extending  the  total  into  the  outside  column. 

223.  We  then  post  the  few  entries  from  the  Sales-book.     Hav- 
ing no  account  on  the  Ledger  with  either  Cannon  or  Benson,  and 
.as  they  are  not  likely  to  buy  of  us  anything  in  the  future,  we 
would  not  open  a  regular  account  with  them,  but  place  their 
names  under  the  Ledger  heading,  PETIT  ACCOUNTS  RECEIVABLE 
(see  page  103),  and  dispose  of  them  accordingly,  as  explained  on 
pages  110  and  111,  which  read  thoroughly. 

224.  We  have  an  account  already  open  with  W.S.Jenkins; 
.hence  we  will  enter  on  the  debit  side  of  it. 

Feb'y  12,        „     Mdse.        7,        9.65. 

225.  We  also  post  from  the  Cash-book  and  the  Journal,  pro- 
ceeding as  usual,  posting  every  item  found  in  the  Sundries  col- 
umns in  both  books,  passing  and  checking  those  found  in  all  the 
special  columns. 


218  A  THREE  WEEKS'  COURSE  OF  PRACTICE. 


SIXTEENTH  LESSON. 

226.  Reopen  the  Cash-book,  February  15.     We  have  another 
note  due  Feb'y  17,  for  $500,  according  to  our  Bills  Payable  book, 
and  it  is  for  money  borrowed  of  our  ~bank.     As  we   have  not 
enough  money  to  pay  it  with  we  will  renew  it  for  45  days,  assum- 
ing that  it  is  satisfactory  to  them. 

227.  We  therefore  make  a  new  note  for    $500,  having  45 
days  to  run,  and  give  it  to  the  bank,  and  they  will  deduct  6#  per 
annum  for  the  time,  and  give  us  credit  by  the  balance  (see  para- 
graph 68). 

228.  We  enter  the  money  received  for  the  note  on  the  debit 
side  of  Cash-book,  crediting  Bills  Payable,  thus: 

„    Bills  Payable.        Renewed  at  1st  Natl. 

Bank  our  Note  of  500.00 

for 46 days®  6£  4.00    496.00. 

Charge  the  bank  account  on  back  of  stub  as  follow*: 
Feb'y  15,  Proceeds  of  Note,  496.00. 

Also  make  memorandum  on  Bills  Payable  book  as  usual. 

229.  We  now  have  money  enough  at  our  credit  in  bank  to 
cover  the  old  note,  which  will  be  charged  to  our  account  by  the 
bank,  and  hence  we  must  give  them  credit  by  it,  as  follows  : 

Feb'y  15,  Less  note  due  Feb'y  17th,  500.00, 

deducting  it  from  the  balance  in   bank.     We  credit  cash,  and 
charge  Bills  Payable  on  credit  side  of  C.  B.,  thus : 

15,  By  Bills  Payable.  Note  due  Feb'y  17th,  500.00. 

Then  mark  it  paid,  under  remarks,  on  Bill-book. 

230.  The  fact  of  renewing  a  note  at  bank,  therefore,  simply  re- 
solves itself  into  borrowing  money  from  them  to  pay  them  again, 
and  to  borrow  money  from  the  bank  requires  the  note  to  pass 
through  the  regular  routine  of  being  discounted,  and  the  old  note 
passes  through  the  regular  routine  of  a  prompt  payment. 

231.  If  the  note  had  been  held  by  private  parties,  we  could 
have  renewed  it  by  giving  them  the  new  note  in  exchange  for 
the  old  one,  and  paid  them  in  cash  the  6$  for  the  time  the  new 
note  has  to  run,  or  included  it  in  the  face  of  new  note.     If  the 

*  The  $4  00  Discount  we  lose  and  charge  it  to  INTEREST  in  Journal  entry, 
First  Form,  and  explain  same  as  in  paragraph  84 


SIXTEENTH    LESSON.  219 

interest  had  been  paid  in  cash,  we  would  have  credited  Cash  and 
charged  Interest,  but  if  it  had  been  included  in  the  new-note^ 
we  would  have  made  the  following  Journal  entry : 

Sundries  Dr.  to  Bills  Payable,  504.00 

Bills  Payable,  500.00 

Interest,  4.00 

This  would  have  been  necessary  to  keep  the  Bills  Payable  ac- 
count straight,  and  have  it  show  all  the  notes  we  had  issued,  also- 
those  redeemed. 

232.  Assume  that  we  receive  a  check  from  First  National 
Bank,  St.  Louis,  for  $99.75,  as  returns  for  Miller  &  Bros.,  accept- 
ance due  on  the  llth,  $100.00,  which  was  left  in  their  (the  bank) 
hands  for  collection.     We  charge  Cash,  and  credit  Bills  Reseiv- 
able  as  follows  : 

„    Bills  Receivable,        Miller  &  Bros. 'acceptance,        100.00 

Less  Exchange,  25    99.75 

we  mark  it 

Paid 

on  Bill-book,  under  remarks,  and  make  a  Journal  entry  for  the 
Exchange,  which  we  lose,  First  Form,  making  Exchange  Dr.  to 
Bills  Receivable,  and  explain, 

For  collecting  Miller  &  Bros. '  acceptance. 

233.  Assume  that  we  receive  a  remittance  from  W.  C.  Brown- 
ing &  Co.,  covering  their  bills  of  February   1st  and    9th,  less 
6#.     We  enter  it  on  the  debit  side  of  Cash-book,  crediting  their 
account  thus : 

,,     W.  C.  Browning  &  Co.,      Feb'y  1st  and  9th,      346.55,  20.79,  325.76. 

disposing  of  it  in  every  way  the  same  as  in  paragraph  150. 

Assume  that  we  receive  a  check  from  Miller  &  Bros.,  for  $150, 
part  of  what  they  owe  us,  we  enter  it  on  the  debit  side  of  Cash- 
book,  at  their  credit-,  thus, 

„    Miller  &  Bros.,          On  acct.,  150.00.* 

234.  The  money  received  from  Browning,  caused  us  to  lose 
$20.79  in  discount,  which  we  can  counteract  by  paying  San  ford 
&   C.o's  bill  of  20th   nit.,  less  5$  which  they  would  allow  us. 
Hence,  we  make  a  check  to  their  order  for  $475.00,  proceeding  as 

*  Deposit  the  three  checks  just  received  and  charge  the  Bank  as  explained 
in  paragraph  10. 


220 

usual  in  such  cases,  deducting  the  amount  from  bank  account, 
and  entering  on  the  credit  side  of  Cash-book,  crediting  Cash 
$475.00,  crediting  Discount  $25.00,  and  charging  San  ford  & 
Co.  $500  (see  paragraph  154). 

235.  Enter  the  retail   sales  for  the  day,   charging  Cash   and 
crediting  Mdse.,  say  $77.50 ;  also  enter  the  amount  from  Petty 
Cash-book,  crediting   Cash    and    charging  Expense,    say  $4.60. 
Prove  the  cash  balance,  and  close  it  for  the  day. 

236.  Charge  up  more  goods  on  the  Sales-book, — that  is,  charge 
our   regular   customers   as   follows :    W.    C.    Browning   &   Co., 
$217.75.;  Davis  &  Co.,  $208.50;  J.C.  Brown  &  Co.  $240.50,  dupli- 
cating their  first  bill,  omitting  case  and  cartage  in  Davis  &  Co.'s 
entry,  which  make  under  date  of  29th,  and  close  the  book  for  the 
month  same  as  last  month. 

237.  Assume   that   we  receive   $250  worth  of    goods   from 
Wright  Mfg.  Co.,  and  $300  worth  from  Sanford  &  Co.     We  en- 
ter it  in  the  Journal,  Second  Form,  charging  Mdse.  $550  in  its 
special  debtor  column,  and  crediting  the  two  firms  by  their  re- 
spective bills,  the  former  in  their  special  credit  column,  and  the 
latter  in  the  Sundries  credit  column,  making  the  usual  explana- 
tion. 

We  conclude  the  lesson  by  posting  from  all  three  books. 


SEVENTEENTH    LESSON. 

238.  February  29. — Reopen  the  Cash-book.  Assume  that 
Miller  &  Bros,  have  failed,  and  effected  a  settlement  with  their 
creditors  at  40  cents  on  the  dollar,  in  cash.  We  find  out  how  much 
they  owe  us  by  referring  to  their  Ledger  account;  then  look 
through  the  Cash-book,  Sales-book,  and  Journal  to  see  if  there 
have  been  any  entries  made  affecting  their  account  which  are  not 
yet  posted ;  then  look  on  the  Bills  Receivable  book  to  see  if  there 
are  any  notes  against  them  not  yet  paid,  either  on  hand  or  nego- 
tiated, and  those  not  yet  due,  of  course,  have  not  been  paid.  We 
find  one  due  March  7,  $130.26 ;  so  we  add  the  amount  to  what 
they  owe  in  open  account,  and  calculate  40$  of  the  total,  which 


SEVENTEENTH   LESSON. 


221 


we  enter  on  the   debit  side   of    Cash-book,  at   their    credit,  as 
follows  : 

„    Miller  &  Bros.,       40$  of  their  acct.       170.96  68.38. 

239.  The  difference  between  what  the}7  pay  and  what  they  owe 
we  lose,  and  charge  it  direct  to  the  Prcfit  and  Loss  account,  and 
credit  their  account  by  making  a  Journal  entry  of  First  Form,. 
and  explain  as  follows  : 

60$  of  their  account,  170.96,  lost  by  their  failure. 

240.  As  they  have  settled  the  amount  of  their  note,  we  must 
return  it  to  them,  charging  their  account  and  crediting  Bills  Re- 
ceivable in  the  Journal  First  Form,  and  explain  as  follows  : 

Returned  to  them  their  note,  due  March  7th.* 
Also  mark  it  under  remarks  on  Bills  Receivable  book, 
Returned  Feb'y  29th.     (See  question  486,  Appendix.) 

241.  Suppose  Austin  Ross  has  returned,  and  hands  us  back 
$50  in  cash   of  the  money  we  gave  him  for  travelling  expen- 
ses, and  accounts  for  the  balance,  $150,  by  handing  us  an  item- 
ized statement  of  his  expenses   during  the  trip,  amounting   to 
$125,  and  the  remaining  $25  he  used  for  his  own  private  mat- 
ters. 

242.  The  $50  we  enter  on  debit  side  of  Cash  as  follows  : 
„       A.  Ross'  Travelling  Acct.      Refunded,        50.00, 

and  make  a  Journal  entry,  Third  Form,  for  the  other  part,  charg- 
ing Expense  $125,  charging  A.  Ross  personal  $25  and  crediting 
A.  Ross'  Travelling  Account  $150,  and  explain  : 
As  per  Expense  report  on  file. 

243.  When  too  much  money  accumulates  in  the  drawer  from 
retail  sales  and  other  payments  received  in  currency,  we  deposit 
it ;  and  as  we  now  have  over  $300  in  the  drawer,  we  will  deposit 
that  amount  and  charge  the  bank  account,  thus : 

Feb'y  29,  Deposited  Currency,  300.00, 

giving  us  a  balance  in  bank  of  over  $500,  which  we  will  use  in. 
paying  Earle  &  Co.'s  bill  of  February  1,  $500,  less  5#. 

244.  We  prefer  to  pay  all  large  sums  by  check,  as  the  check 
must  be  indorsed  by   the   party  we  give  it  to  before  they  can 

*  See  FIFTH  AFTERTHOUGHT,  page  227. 


222  A  THREE  WEEKS'  COUESE  OF  PRACTICE. 

negotiate  it,  and  when  indorsed  and  paid  it  would  be  returned 
to  us  by  our  bank  with  other  vouchers  at  the  time  of  balancing 
the  Bank-book,  and  it  would  be  the  best  possible  receipt  for  the 
amount  paid  the  party.  If  we  had  the  currency  in  the  drawer, 
we  would  deposit  it,  and  then  draw  a  check  for  the  amount  we 
.wish  to  pay,  for  that  reason. 

245.  We  therefore  make  a  check  to  the  order  of  Earle  &  Co. 
for  $±75,  making  the  usual  statement  of  the  facts  on  the  stub,  and 
deduct  it  from  the  bank  account ;  then  enter  it  in  the  Cash-book, 
together  with  the  discount  we  made  in  the  settlement,  as  follows: 

By  Earle  &  Co.,  Feb'y  1,  500.00        25.00        475.00. 

246.  We  assume  that  the  junior  partner  draws  $50  in  cash. 
We  charge  it  to  his  account  and  credit  Cash,  disposing  of  it  as  we 
did  in  the  case  of  P.  A.  Wright,  paragraph  110.      We  also  hand 
the  porter  $20  and  the  office  boy  $7,  their  wages  in  cash  for  two 
weeks,  charging  it  to  Expense  on  credit  side  of  C.  B.     Enter  the 
retail  sales  for  the  day,  charging  Cash  and  crediting  Mdse.  as 
usual,  say  $75.     Enter  the  amount  of  Petty  Cash  book,  say  $5.50, 
crediting  Cash  and  charging  it  to  Expense,  and  as  Expense  was 
the  last  account  on  the  credit  side  of  Cash-book,  we  must  not  re- 
peat it,  but  simply  write  in  the  space  for  explanation  : 

See  Petty  Cash  book,  5.50. 

Prove  the  cash  balance,  and  close  it  for  the  last  time,  thus,  in 
red  ink : 

74.37  81.13 

„     Balance,  Bank,  Drawer,  155.50 

247.  We  post  from  the  Cash-book  first  by  turning  to  Miller  & 
Bros,  account  and  entering  on  the  credit  side  simply, 

29  „     Cash,      7,        68.38. 

Also  the  same  way  with  Austin  Ross'  Travelling  Account.  We 
have  already  had  an  entry  like  the  first  on  the  credit  side  of  Cash- 
book,  and  will  dispose  of  it  the  same  way.  In  fact,  every  item 
found  in  the  Sundries  column,  either  side,  must  be  posted,  but 
those  in  specials  we  pass  and  check  as  heretofore. 

248.  In  posting  from  our  Journal,  the  first  account  to  dispose 
of  is  Profit  and  Loss,  which  has  not  yet  been  opened  in  the 
Ledger.     We  always  give  it  a  top-heading  and  never  a  sub-head- 


SEVENTEENTH   LESSON.  223 

ing,  as  it  is  one  of  the  most  important  accounts  on  the  books,  and 
is,  therefore,  entitled  to  the  distinction  of  being  placed  at  the-top 
of  the  page  and  not  half-way  down  the  page. 

249.  We  open  Profit  and  Loss  account  on  page  12,  and  enter 
on  the  debit  side, 

Feb'y  29,  To  Miller  &  Bros.,      7,        102.58. 

Then  on  the  credit  side  of  Miller  &  Bros.'  account  we  enter, 
29  „  P.  &  L.,  7,        102.58. 

Austin  Boss'  Travelling  Account  is  the  first  in  next  entry,  and  we 
credit  it  thus: 

29  ,,  Sundries,  7,        150.00. 

Then  dispose  of  Expense  by  entering  on  the  debit  side, 
Feb'y  29.  „  A.  R.  Trav.  •/„»     7,        125.00. 

Also  on  the  debit  of  A.  Ross'  account  we  enter, 

Feb'y  29,  „  A.  R.  Trav.  %,     7,          25.00. 

250.  Being  at  the  end  of  the  month,  the  books  must  all  be  closed 
to  get  the  monthly  results  from  each.     The  closing  of  our  Cash- 
book  will  be  different  to  last  month,  owing  to  the  fact  of  having 
the  two  Discount  columns.    The  line  extending  across  the  page  on 
each  side  will  be  produced  across  the  Discount  columns  only,  and 
on  the  next  line  we  rule  across  the  other  two  specials,  Mdse.  on 
the  left  hand  Expense  on  the  right  of  the  page,  and  on  the  next 
line  we  rule  across  the  two  Sundries  columns  on  each  side;  then 
omit  one  line  and  rule  across  the  two  amount  columns,  and  finally 
rule  a  double  line  across  each  page  on  the  next  line,  beginning  at 
the  column  for  months  on  each  side.     The  idea  is  not  to  have 
two  columns  on  either  side  added  on  the  same  line.     See  the 
closing  of  Miniature  Cash-book,  pages  68  and  69. 

251.  The  footings  of  the  columns  on  the  debit  side  of  the  Cash- 
book  will  be  explained  as  follows : 

1/29    Dis.,    Dr.  ToSunds.,  Total  dis.  all'dbyus,  49.31 

Mdse.,  Cr.  By  Cash,     Total  Retail  Sales,  430.00    430.00 

Cash,    Dr.  To  Sunds.,  Total  Receipts,  2950.79  2950.79 

Balance,  From  Jan'y  31,  (This  line  red  ink.)    337.07 

3287.86 


224  A  THREE  WEEKS'  COURSE  or  PRACTICE. 

252.  On    the  credit  side   of  Cash-book   the   footings   of  the 
columns  will  be  explained  as  follows  : 

1/29  Dis.,         Cr.  By  Sunds.,  Total  dis.  all'd  us,      80.00 

Expense,  Dr.  To  Cash,    Total  Cash  Expense,  75.00      75.00 

Cash,        Cr.  By  Sunds.,  Total  Disbursements,  3132.36  3132.36 

Balance,  Carried  to  Mar.  1,         (This  line  red  ink.)  155.50 


3287.86 

253.  This  being  the  end  of  our  season,  that  is,  the  time  for  ad- 
justing the  profit  or  loss  of  the  business,  as  we  explain  in  another 
place,  we  must  adjust  the  interest  on  P.  A.  Wright's  additional 
investment  of  $500,  as  per  agreement,  which  will  require  a  Jour- 
nal entry  of  the  First  Form,  charging  Interest  and  crediting  his 
account,  and  explain  as  follows : 

6#  Interest  on  additional  investment  of  $500  from  Jan.  20, 
to  date  (40  days),  as  per  copartnership  agreement,  $3.33. 

254.  We  make  the  usual  entry  in  the  Journal  that  is  made 
every  month  on  the  last  day,  crediting  the  clerks  by  their  services 
$100  each,  crediting  the  landlord  by  $125  for  rent,  and  charging 
the  total  to  Expense,  duplicating  the  last  entry  in  the  Journal  for 
January. 

255.  Having  special  columns  in  the  Journal,  we  close  it  on  the 
same  principle  as  we  did  the  Cash-book,  by  extending  the  line  that 
is  ruled   across  the   main   part  of  the  book,  across  the  Mdse.  Dr. 
column,  and  on  the  next  line  rule  across  the  Wright  Mfg.  Co.'s 
special  credit  column  only,  and  o-n  next  line  rule  across  both  the 
Sundries  columns,  which  add  ;  and,  finally,  on  next  line,  rule  a 
double  line  across  the  page,  beginning  at  the  column   for  the 
month  on  the  left. 

256.  The  footings  of  the  two  special  columns  will  be  explained 
thus : 

Mdse.,     Dr.  To  Sunds.,  Total  purchases,     4850.00  4850.00 

W.  Mfg.  Co.,  Cr.  By  Mdse.,   Purchases  of  them,  2750.00  2750.00 

See  closing  of  Miniature  Journal,  page  81. 

257.  In   posting  the  footing  of  the  Discount  column  on   the 
left  in  the  Cash-book,  we  write  on  the  debit  side  of  Discount, 

Feb.  29.     1/29        "  "  8,        49.31 


EIGHTEENTH   LESSON.  225 

and  that  on  the  right  we  enter  on  the  credit  side, 
1/29        „     Sundries,      7,  80.00 

The  footings  of  the  other  columns  will  be  posted  same  as  last 
month. 

258.  In  posting  the  footings  of  the  two  special  columns  in  the 
Journal,  we  dispose  of  Mdse.  first,  by  entering  on  the  debit  side, 

1/29        „     Sundries,      7,        4850.00 

and  on  the  credit  side  of  Wright  Mfg.  Co.'s  account  we  enter, 
1/29  Mdse.,         7,         2750.80 


EIGHTEENTH   LESSON. 

259.  Make  a  Trial  Balance,  showing  the  condition  of  every 
unbalanced  account  in  the  Ledger  from  the  beginning  of  the  ac- 
count to  the  present  time,  proceeding  in  the  same  manner  as  last 
month. 

260.  If  it  balances  we  then  assume  that  we  have  gone  over 
twelve  months,  and  therefore  we  are  now  at  the  end  of  the  year,  as 
the  next  ten  months  would  be  a  repetition  of  entries  and  closings 
of  the  last  month;  then  close  the  Ledger  accounts  to  see  whether 
we  have  made  or  lost,  and  to  see  what  our  Resources  and  Liabili- 
ties are,  also  Net  Capital,  proceeding  according  to  Rules  for  Clos- 
ing Books,  pages  43  and  44,  assuming  our  Stock  on  hand  as  per 
inventory  to  be  $7300. 

261.  After  completing  that  operation,  we  reopen  the  Ledger 
accounts  according  to  Rules  for  Reopening  Books,  page  45,  and 
conclude  the  course  by  making  a  &i\&\~Balance  Sheet,  like  the  one 
on  page  116,  according  to  the  rules  on  page  50. 

262.  If  the  books  are  written  up  correctly,  the  final  result  will 
show  each  partner's  net  gain  to  be  $57.08^.   As  we  cannot  consider 
halves  in  Ledger  accounts,  we  give  the  senior  one  cent  more  than 
the  junior  when  the  profits  do  not  divide  equally.     The  senior's 
Net  Capital  will  be  $1,510.42,  the  junior's  Net  Capital  $1,007.08; 
the  Total  Assets  $9,182.85;  Total  Liabilities,  $6,665.35. 


226  A  THKEE  WEEKS'  COURSE  OF  PKACTICE, 

FIRST  AFTERTHOUGHT. 

263.  On  page  211,  paragraph  194,  and  on  page  212,  paragraph 
199,  are  two  instances  in  which  we  pay  out  money  and  receive 
notes  in  exchange  (Miller  Bros.'  note  in  one  instance  and  A.  F. 
Benson's  in  the  other),  but  do  not  charge  Sills  Receivable  in  both 
cases,  which  would  be  in  harmonious  accord  with  our  theory  to 
debit  whatever  we  receive.     In  the  first  instance,  Miller  Bros.' 
note  has  been  invalidated  by  having  been  protested,  and  is  there- 
fore no  longer  recognized  as  Bills  Receivable  •  hence  we  charge 
Miller  Bros.'  account,  because  we  receive  nothing  of  value  for 
money  expended  for  their  benefit.     Paying  out  money  for  one's 
benefit  is  same  thing  as  paying  it  to  them. 

SECOND   AFTERTHOUGHT, 

264.  On  page  216,  paragraph  216,  there  is  another  instance  in 
which  practice  differs  from  theory.  Theoretically  we  would  charge 
Bills  Receivable,  because  we  receive  Brown's  note  in  exchange 
for  the  money ;  but  that  would  necessitate  another  entry  in  the 
Journal,  in  which  the  account  of  J.  C.  Brown  &  Co.  would  be 
charged  and  Bills  Receivable  credited  when  the  note  was  for- 
warded to  them.     It  is  easily  understood  to  be  practically  best  to 
charge  the  money  directly  to  their  account,  thereby  dispensing 
with  the  Journal  entry,  as  the  whole  matter  finally  resolves  itself 
into  an  issue  between  J.  C.  Brown  &  Co.  and  Cash.  If  we  buy  any- 
thing, no  difference  what  it  may  be,  for  another  person,  we  charge 
their  account  with  its  cost,  if  it  was  done  for  accommodation. 

THIRD   AFTERTHOUGHT. 

265.  In  discounting  notes  at  Bank,  they  must  first  be  Offered 
for  discount,  as  it  is  termed  in  business  phraseology  ;  hence  the 
notes  would  be  submitted  in  a  letter  written  to  the  Cashier,  like 
the  one  on  page  134,  which  see.    The  Cashier  brings  them  before 
the  hoard  of  directors  at  their  next  meeting,  and  they,  as  a  body, 
pass  their  judgment  upon  them,  authorizing  the  Cashier  to  accept 
the  notes  if  satisfactory  to  them,  or  reject  if  the  notes  are  not 
considered  good.     The  next  day,  when  we  present  our  pass-book 


A  THREE  WEEKS'  COTJESE  OF  PEACTICE.          227 

at  the  Discount  Clertfs  desk,  he  enters  at  our  credit  the  pro- 
ceeds of  those  accepted,  and  hands  us  those  that  were  rejected, 
without  explanation.  "When  we  are  in  a  hurry  to  realize  on  the 
notes  and  cannot  wait  for  the  Bank's  regular  discount  day,  the 
Cashier  assumes  the  responsibility  of  passing  upon  the  notes  and 
gives  us  credit  at  once  by  their  present  worth. 

FOURTH   AFTERTHOUGHT. 

266.  Accommodation  paper   should   be  treated   as   our   own 
obligation ;  that  is,  if  a  friend  gives  us  his  note,  or  accepts  our 
time  draft,  with  the  understanding  that  we  meet  them  at  matur- 
ity  a  de  facto  Bills  Receivable  becomes  a  dejure  Bills  Payable, 
When  they  are  afterwards  discounted,  we  credit  Bills  Payable 
with  the  proceeds  in  the  Cash  Book,  and  with  fae  Interest  (or  dis- 
count) in  the  Journal,  and  make  the  usual  extra  memoranda  on 
Bills  Payable  Book.     Another  instance  in  which  practice  differs 
from  theory  :  in  business  we  deal  with  realities,  noi  formalities. 

FIFTH    AFTERTHOUGHT. 

267.  If  we  hold  a  customer's  note  at  its  maturity,  say  for  $150, 
and  he  can  pay  only  a  part  of  it,  say  $50,  we  charge  Cash  and 
credit  Bills  Receivable  with  the  amount  received  and  endorse 
it  on  back  of  the  note?  also  make  pencil  memoranda  on  Bills- 
Receivable  Book  to  that  effect     The  balance  will  properly  adjust 
itself  and  no  notice  is  taken  of  it. 

2680  If,  however,  he  gives  us  a  new  note  for  the  balance,  we 
would  carry  the  whole  matter  through  his  account  by  charging 
Cash  and  crediting  his  account  with  the  money  he  gave  us,  then 
make  the  following  Journal  entry : 

Sundries  Dr,  to  Bills  Receivable $150.00 

Bills  Receivable $100.00 

. . .  o (Customer's  name) 50.00 

This  would  balance  his  account  again,  and  set  the  Bills  Receiv- 
able straight,  showing  new  note  on  hand  and  that  the  old  note 
had  been  disposed  of,  in  other  words,  returned. 

269.  If  at  maturity  the  note  is  in  the  hands  of  another  who 
would  not  accept  such  a  settlement  but  require  payment  in  full, 
we  would  come  to  our  customer's  relief  and  advance  him  what- 
ever amount  he  needed  to  meet  the  obligation,  say  $100,  by 


228  A  THREE  WEEKS'  COUESE  OF  PRACTICE. 

sending  him  our  check  or  permitting  him  to  draw  on  us  at  sight, 
in  which  case  we  would  credit  cash  and  charge  his  account  with 
the  money  advanced,  $100.  Then  upon  receipt  of  his  note  for 
one  hundred  dollars  plus  the  interest  we  would  make  two 
Journal  entries,  as  in  the  case  of  Miller  Bros.,  page  213,  para- 
graphs 204-  and  205. 

SIXTH  AFTERTHOUGHT. 

2TO.  After  the  books  of  original  entry  have  all  been  closed  and 
posted,  the  next  thing  is  to  ma~ke  statements  of  Customer's  ac- 
counts and  mail  them  so  as  to  facilitate  collections.  The  state- 
ments  should  be  made  before  the  Trial  Balance  as  the  latter  may 
have  errors,  in  locating  which  many  days  may  be  consumed  and 
we  could  not  defer  sending  statements  indefinitely  if  we  were  in 
need  of  money.  It  is  a  good  idea  to  make  press  copy  of  all 
statements  (see  page  22),  in  fact  of  every  written  communication 
or  document. 

2T1.  The  fact  of  sending  statements  to  a  customer  is  not  neces- 
sarily a  dun  unless  the  account  is  past  due,  as  each  customer 
should  receive  an  account  current  monthly  in  order  to  compare 
accounts  and  rectify  any  existing  discrepancies. 

272.  As  many  small  merchants  throughout  the  country  are 
over-sensitive  on  this  point,  the  bookkeeper  would  not  be  per- 
mitted to  send  statements  indiscriminately  to  every  one,  but  after 
all  are  made  he  submits  them  to  the  financier  or  the  credit  man, 
who  withholds  those   not  to   be   sent  that   would   likely  give 
offence. 

A  pencil  memoranda,  "  Do  not  send  Statement,"  or  in  fact  of 
every  special  thing  to  be  observed  in  dealing  with  such  customers 
should  be  made  in  their  Ledger  account. 

273.  The  statement  each  month  should  show  every  item  of  the 
unsettled  account  and  not  begin  with  "  Balance  as  per  last  state- 
ment," as  is  often  the  case,  as  it  would  save  the  delay  consequent 
upon  the  customer  writing  back  to  inquire  what  the  "  balance" 
was  tor,  the  last  statement  having  been  consigned  to  the  waste 
basket  immediately  upon  its  receipt. 


A   COMMON-SENSE   VIEW   OF  BOOKKEEPING.  229 


MANUFACTURING. 

274.  This  is  one  branch  of  the  Mercantile  business,  and  the 
books  are  conducted  according  to  the  same  routine  already  ex- 
plained in  our  Eighteen  Lessons  of  Practice,  and  exemplified  in 
our  Miniature  Set. 

275.  The  only  difference  being  that  instead  of  buying  goods 
from  other  firms,  the  material  is  bought  and  labor  employed  to 
manufacture  it  into  salable  articles.     Merchandise  would  be  the 
principal  account,  and  would  be  charged  with  the  cost  of  material 
and  labor,  no  manufacturing  account  being  necessary, — as  stated  in 
a  recently-published  scrap-book,  or  compilation  of  borrowed  ideas, 
the  writer  of  which,  not  knowing  himself,  and  being  misguided 
by  what  some  one  told  him, — unless  other  goods  (regular  goods) 
are  bought  and  sold  besides  those  we  manufacture,  in  which  case 
Mdse.  would  represent  the  former  and  Manufacturing  the  latter, 
if  it  was  desired  to  know  how  much  was  made  on  each  kind. 

276.  In  that  case,  two  Sales  Books  would  be  required  :  one  for 
each  kind  of  goods,  or  a  general  Sales  Book  with  three  columns, 
one  column  being  for  regular  goods,  one  for  manufactured  goods, 
and  one  for  the  total  of  both. 

277.  The  Manufacturing  account  would  be  credited  monthly 
with  the  footing  of  Sales  Book  kept  for  manufactured  goods,  and 
be  treated  in  every  way  the  same  as  a  Merchandise  account  in 
closing  and  reopening  the  books. 

278.  A  few  extra  auxiliaries  would    be  necessary,  such  as  a 
Book  of  Costs,  journal  form,  in  which  would  be  kept  an  itemized 
account  of  the  various  kinds  of  material  and  labor  used  in  making 
each  article  of  different  grades,  like  the  following. 

279.  It  will  be  noticed  that  there  are  thirty-three  items  of  cost 
in  the  manufacture  of  a  cheap  corset,  the  omission  of  either  of 
which  would  be  serious  in  an  extensive  business. 


230  MANUFACTURING. 


Cutting 

.08 

2nd  Exp. 

.02 

Gores 

.02 

Stitching  Lace 

.03^ 

Stitching 

.85 

Lashing 

.01 

"         Gores 

.10 

Rolling  and  Boxing 

.02 

Closing 

.28 

Frt.  and  Cases 

.06 

1st  exp. 

.OSi 

Coutil  @  7* 

1.05 

Stitching  Steels 

.05 

Jean  @  7* 

.65* 

Hand  Embroidering 

1.00 

Clasps 

.20 

Shaping 

.07 

Busk  Steels 

.10 

Boning 

.25 

Backs 

.12 

Binding 

.04* 

Side  Steels 

.07 

End  Fastening 

.05 

Bone 

.65 

Eyeleting 

.02 

Binding 

.08 

Pressing 

.11 

Lace 

.20 

Boxes 

.25 

Ribbon 

.13 

Labels 

.02 

Eyelets 

.04 

Printing 

.03 

Net  cost  per  doz. 

6.70 

280.  To  the  net  cost  we  add  our  percentage  of  profit  whatever 
we  wish  to  make.     If  we  manufacture  a  specialty  in  which  we 
have  a  monopoly,  our  profit  percentage  would  be  greater  than  if 
others  were  manufacturing  same  kind  of  article,  causing  strong 
competition  ;  then  add  another  percentage  to  cover  office  expenses, 
another  to  cover  cost  of  selling,  also  small  percentage  to  cover 
possible  losses  through  failures  and  bad  debts ;  finally  we  add  6f# 
to  cover  cash  discount  of  6  fa  the  last  result  showing  the  list  price 
of  goods.     It  is,  of  course,  understood  that  6$  added  to  any  amount 
would  not  be  the  same  thing  as  Q%  deducted  from  the  result,  hence 
the  object  of  adding  a  fraction  more. 

281.  There   is    another  mathematical  principle  that  few  are 
familiar  with,  that  is,  a  half  added  to  any  amount  is  the  same  as 
a  third  deducted  from  the  result ;  a  third  added  equals  one  quarter 
deducted,  one  quarter  added  being  equivalent  to  one  fifth  of  the 
result  deducted,  and  so  on  ad  i/nrjmitum.     As  an  example,  take 
10,  add  half  (5),  making  15  ;  one  third  of  15  is  the  original  half. 

282.  It  is  often  convenient  to  have  the  cost  price  as  well  as 
the  selling  price  marked  on  the  goods,  in  which  case  the  former 
would  be  indicated  by  characters  representing  each  numeral  from 
1  to  10,  or  a  word  containing  ten  different  letters,  as  follows: 

123456789   10 
Buckingham 


A    COMMON-SENSE   VIEW    OF   BOOKKEEPING.  231 

283.  The  word  Paris  having  five  different  letters  makes  a 
.private  mark  hard  to  decipher  by  others,  but  easily  read  by  the 
seller,  using  capitals  for  the  first  five  figures  and  small  letters  for 
the  next  five,  and  *' X"  as  a  repeater  of  either  letter  when  the 
came  figure  occurs  twice  together.     "Black  Horse"  and  "Brick 
House"  are  tirneworn,  and   are  of   such  common  usage  that  it 
would  be  almost  equivalent  to  marking  with  the  numerals  they 
Represent. 

284.  A  payroll  book  would   be  indispensable,  owing  to  the 
fact  of  having  many  employees  in  the  factory  department  besides 
the  regular  clerical  and  office  help ;  this  would  also  suggest  the 
keeping  of  a  salary  account,  which  would  be  charged  instead  of 
expense,  with  the  money  used  in  meeting  pay-roll  weekly ;  also 
salaries  of   salesmen   and   bookkeeper,  whose   name  would  not 
appear  on  the  pay-roll,  as  they  would  have  a  Ledger  account. 

285.  Money  advanced  in  small  sums  to  the  hands  should  be 
marked  against  their  names  on  pay-roll  with  pencil ;  also  on  a 
small  slip  of  paper,  which  should  be  kept  in  the  cash-box,  repre- 
senting the   money,  until  it  disappears   at  the  time  of  settling 
with  the  employee. 

286.  At  the  end  of  the  season,  that  part  of  salary  account  ap- 
pertaining to  hands  in  the  factory  would  be  charged  to  Manu- 
facturing account  in  a  Journal  entry  as  follows : 

Manufacturing  Dr. 

To  Salaries 

The  debit  balance  in  the  latter  account  would  then  show  the  cost 
of  general  help?  which  ordinarily  would  have  been  charged  to 
Expense. 

287.  A  Machinery  and  fixture  account  would  also  be  neces- 
sary, in  addition  to  Office  Furniture  account,  owing  to  the  fact  of . 
having  many  machines  and  general  machinery.     This  account 
would  be  charged  with  the  cost  of  all  kinds  of  machinery  used  in 
the  Factory,  and  would  be  revalued  yearly,  and  a  certain  per  cent 
charged  through  the  Journal  (see  entry  below)  to  Manufacturing 
account  for  wear  and  breakage  of  machinery  in  use, 

Manufacturing  Dr. 

To  Machinery  and  Fixtures 


232  MANUFACTURING. 

Tlie  debit  balance   in    the  latter  account  representing  present 
valuation  of  everything  charged  to  it. 

288.  Where  there  are  a  score  or  more  of  employees,  punctu- 
ality would  be  required  of  each,  as  a  few  minutes  lost  by  each  of 
many  would  form  into  days  during  the  year,  and  entail  consid- 
erable loss  to  the  business.  To  ensure  punctuality,  a  fine  is  im- 
posed when  one  is  late.  It  would  seem  picayune,  or  small,  to 
notice  a  few  minutes  lost  in  one  instance,  but  in  many  instances 
of  lost  time  the  importance  of  reckoning  it  can  easily  be  seen  and 
appreciated. 

'289.  The  time  each  employee  enters  is  registered  on  a  time- 
book  by  a  time-keeper,  and  whenever  one  leaves  the  establishment, 
Ms  time  is  taken,  and  if  absent  beyond  regular  allowance,  the  de- 
linquency is  noted  on  pay-roll  and  deducted  from  his  dues  at  the 
time  of  paying  off. 

290.  In  many  establishments  the  wddksjyerk   ends  Friday 
evening,  instead  of  Saturday,  of  each  week,  so  as  to  get  the  full 
time  put  in  by  each  workman,  and  enable  the  cashier  to  figure  up 
the  pay -roll  Saturday  forenoon,  and  provide  the  necessary  funds 
to  meet  it,  which  must  be  drawn  from  the  bank,  which  could  not 
be  done  if  paying  off  took  place  Saturday  evening,  as  the  time 
would  not  be  turned  in  until  too  late  to  draw  money  out  of  bank. 

291.  It  is  often  the  case  that  outside  workmen  are  employed 
to  do  piece  work,  which  they  do  not  care  to  be  paid  for  as  fast  as 
turned  in,  but  wait  until  they  have  finished  other  work  they  may 
have  on  hand. 

292.  Where  this  state  of  affairs  exists  at  the  end  of  the  year, 
and  the  Inventory  is  taken,  it,  of  course,  includes  Mdse.  that  has 
not  been  charged  with  its  full  cost;  hence  it  becomes  necessary  to 
make  a  Journal  entry  charging  Manufacturing  or  Mdse.,  which- 
ever account  is  kept,  and  crediting  an  account  that  would  have  to 
be  opened  to  represent  the  amount  due  on  finished  work. 

293.  The  following  entry  would  be  in  order : 

Manufacturing  (or  Mdse.)  Dr. 

To  Workmen 

See  Hands  Ledger, 

The  last-mentioned  book  meaning  an  auxiliary  in  which  is  kept 


A   COMMON-SENSE   VIEW   OF  BOOKKEEPING. 


233 


by  single  entry  an  account  with  each  outside  workmaru  .This 
would  necessitate  an  account  in  the  Main  Ledger,  entitled  Work- 
men, showing  a  liability,  and  which  would  be  balanced  by  charg- 
ing it  when  the  workmen  were  paid. 


CONVENIENT   TEMPORARY    FILE. 

For  description  see  page  129. 


FIG.  1. 
Showing 
complete 
disorder. 


Order 

is 

Heaven's 
first  law. 


FIG.  2. 

Showing 

perfect 

order. 


COMMISSION  BUSINESS. 

294.  The  essential  difference  between  the  Mercantile  and  the 
Commission  business  consists  in  the  fact  that  in  the  former  the 
goods  are  bought  outright,  and  in  the  latter  they  are  received  on 
consignment,  to  be  sold  for  the  account  and  risk  of  others,  there 
being  no  difference  necessarily  in  the  manner  of  selling  or  means 
of  disposing  of  them. 

295.  To  explain  how  to  keep  books  for  a  commission  busi- 
ness, we  must  take  into  consideration  which  of  the  three  branches 
of  the  business  is  meant :  First,  The  Produce  Commission,  which 
includes  flour,  grain,  poultry,  fruit,  butter,  eggs,  etc.     Second, 
The  Cotton  and  Tobacco  Commission,  called  heavy  produce,  be- 
cause handled  in  large  bulk — called  bales  for  the  former  and 
hogsheads  for  the  latter.     Third,  The  Dry  Goods  Commission, 
which  would  mean  any  kind  of  goods  usually  sold  in  the  mercan- 
tile business,  groceries  excepted.    Strange  to  say,  we  never  heard 
of  a  Grocery  Commission  Business. 

296.  Our  experience   as  a   bookkeeper  began  in  the    second 
mentioned,  and  terminated  sixteen  years  thereafter  in  the  third 
named ;  hence  we  give  the  reader  the  benefit  of  our  experience, 
and  not  an  extract  of  something  read  elsewhere. 


234 


COMMISSION   BUSINESS. 


297.  When  the  consignments  of  Cotton  and  Tobacco  are  small 
but  frequent,  and  soon  closed  out,  no  Consignment  Book  is  needed, 
as  the  Bill  of  Lading  that  accompanies  each  shipment  is  kept 
on  temporary  file  (see  page  233)  until  the  goods  are  disposed  of, 
then  filed  permanently.     Those  remaining  on  temporary  file  will 
account  for  the  goods  unsold. 

298.  As  the  goods  are  arranged  for  sale,  each  Bale  or  Hogs- 
head would  be  numbered  and  entered  on  a  mem.  sales  book,  about 
5|-  x  12^-,  specially  designed  (see  diagram  below). 


No. 

Gross. 

Tare. 

Net. 

Price. 

Amount. 

Name. 

1001 
W3 

1840 

15 

1825 

10 

182 

50 

Viele 

1002 
G10 

1920 

15 

1905 

5 

95 

25 

Nesbit 

299.  The  date  of  sale  would  be  written  at  the  top  of  each 
page.     The  first  space  on  the  left  being  warehouse  number,  also 
the  shipper's  private  number  and  mark  ;  the  next  spaces  in  order 
explain  themselves,  the  last  being  for  the  buyer's  name.      The 
goods  do  not  have  to  be  described  on  this  book  as  Bale  or  Hogs- 
head, Cotton  or  Tobacco,  as  the  weight  will  indicate  which  it  is, 
the  former  usually  weighing  from  300  to  600  Ibs.,  and  the  latter 
from  1800  to  2200  Ibs. 

300.  A  book   would  be  kept  for  each  and  have  a  warehouse 
number  of  its  own  not  in  numerical  order  with  the  other.     The 
bill  would  be  made  from  this  book,  and  as  it  would  be  presented 
to  and  paid  by  the  purchaser  at  once,  no  copy  is  required.     The 
money  received  would  be  entered  on  the  debit  side  of  Cash  Book, 
thereby  charging  cash,  and    crediting  the   special   consignment 
account  that  the  goods  belonged  to ;   the  name  of  the  purchaser 
being  entered  in  the  space  for  explanations. 

301.  From   this  book  the  Account  Sales  would  also  be  made 
according  to  the  form  herewith  given,  and  a  press  copy  made,  as 
explained  on  page  22,  then  the  original  memoranda  cancelled. 


A   COMMON-SENSE  VIEW   OP   BOOKKEEPING. 
FORM  OF  AN  ACCOUNT  SALES. 


235 


Account  Sales  of 
for  account 

2  Hhds.  Tobacco  by  $.  <&.  torigljt  #  €0., 
of  E.  H.  E.  Wright,  Evansville,  Ind. 

Marks. 

Ware- 
house 
No. 

Gross. 

Tare. 

Net. 

Rate. 

Extension. 

Amount. 

W  No.  1  .  . 
2.... 

1001 
1002 

1790 
1620 

155 
170 

1635 
1450 

8 
5 

80 
55 

143 

80 

88 

47 

224 
18 

35 

35 
00 

Charges. 

Freight  and  charges. 
Dravane 

5 
1 
1 

4 

1 
5 

00 
00 
25 
00 
50 
60 

Insurance 

Cooperage  and  Inspe 
Storage  

ction                                       . 

Commission  ( 

E.  &  0.  E. 

New  Yoi 

7j)  viti 

Net  Proceeds 

rk,  January  21st,  1890. 
Jp.  a. 

torigljt  < 

206 

&  €0. 

The  blank  form  would  be  the  size  of  half  sheet  of  letter-paper, 
8x10. 

302.  From  the  press  copy  of  Account  Sales  we  make  the  fol- 
lowing Journal  entry. 

Wright's  Consignment  Dr.  To  Sundries  219.35 

"  Commission  5.60 

"  Dray  age  1.00 

"  Insurance  1.25 
"  Cooperage  and  Inspection           4.00 

"  Storage  1.50 

"  E.  H.  E.  Wrigut  206.00 

303.  The   Freight  and  Charges  having  already  been  charged 
to  Wright's  Consignment  on  the  credit  side  of  the  Cash  Book  at 
the  time  it  was  paid  on  receipt  of  the  goods,  it  of  course  does 
not  appear  in  the  Journal  entry. 


236  COMMISSION   BUSINESS. 

304.  The    above   entry    necessitates     a  Ledger    account    for 
Wrights     Consignment,     Commission,     Dray  age,     Insurance, 
Cooperage  and  Inspection,  and  Storage, 

305.  If  the  full  amount  of  net  proceeds  is  remitted  promptly, 
no  account  would  be  opened  with  E.  H.  E.  "Wright,  and  for  that 
reason  it  would  not  appear  in  the  Journal  entry  reducing  the 
debit  against  the  Wright  Consignment  to  $13.35,  the  $206.00 
being  charged  to  it    on  the  credit  side   of    Cash  Book  at  the 
time  of  remitting  the  money  to  consignor  which  would  balance 
that  account.     The  various  other  accounts  belong  to  the  Specula- 
tive Class  and  show  profits. 

306.  It  is  often  necessary  to  advance  money  to  a  shipper   to 
control  or  secure  his  consignment,  possibly  before  the  goods  have 
been  received,  in  which  case  he  would  be  permitted  to  draw  at 
sight  on  Bill  of  Lading,  which  would  accompany  draft  and  show 
that  the  goods  were  in  transitu. 

307.  In  that  case,  the  money  would  be  charged  to  his  account 
on  credit  side  of  Cash  Book,  which  would  make  it  necessary  to 
credit  him  in  the  foregoing  journal  entry  with  the  net  proceeds. 
If  he  had  the  money  any  length  of  time  to  speak  of  before  his 
goods   were  sold,  he  would   be  charged   with   Interest  on  the 
amount  advanced. 

308.  In    an  extensive  business   where  the  consignments   are 
large  and  from  many  shippers,  and  goods  likely  to  be  stored  for 
many  days,  a  Consignment  Book,  which  would  be  nothing  more 
than  a  stock  book,  would  be  a  necessity  to  keep  track  of  the  goods. 

309.  It  would  be   specially  ruled  with  spaces  showing  date 
received,  private  mark  and  number,  warehouse  number,  shipper's 
name,  shipper's  address,  description  of  goods,  date  sold,  to  whom 
sold*  when  delivered,  any  other  particulars  being  altogether  un- 
necessary. 

310.  The  conventional  forms  usually   found    in  publications 
compiled  by  people  who  never  saw  the  inside  of  a  commission 
house  are  wholly  impracticable  and  exist  only  in  their  disordered 
or  perverted  imagination. 

311.  It  is  a  double  page  book,  the  left-hand  page  being  made 
to  show  the  goods  received  and  the  charges  thereon.     The  right- 
hand  the  goods  sold  and  the  amount  realized  therefor,  also  the 


A   COMMON-SENSE   VIEW    OF   BOOKKEEPING.  237 

purchaser's  name,  the  difference  being  the  net  proceeds,  which 
would  appear  on  the  left-hand  page  to  balance. 

312.  The  Commission  Sales  account,  showing  amount  of  all 
goods  sold  on  commission,  exists  in  theory  only,  in  lieu  of  which 
a  special  consignment  account  with  each  consignor  is  kept,  which 
will  balance  by  concurrence  of  entries  when  the  consignment  is 
closed  out. 

313.  The  Dry  Goods  Commission  business  has  many  peculiar 
features,  which  make  the  accounts  decidedly  intricate  and  difficult 
to   explain.     It  is  generally  an  office  business,  no  goods  being 
kept  besides  a  line  of  samples,  all  orders  being  filled   at  the 
FACTORY  (usually  and  erroneously  called  the  MILL,  as  a  Mill  is  a 
place  where  grinding  is  done,  and  Factory  a  place  where  any- 
thing is  made). 

314.  The  commission  merchant  conducts  his  business   after 
the  mercantile  methods  in  disposing  of  the  goods  and  making  col- 
lections.    He  receives  his  orders,  numbers  them,  and  enters  them 
on  order  book,  see  page  128,  makes  a  copy,  and  forwards  it  to 
the  Factory,  filing  the  original  order,  which  must  be  numbered 
to  correspond  with  order  book  and  copy. 

315.  The  Factory   (which  we  will  use  in   the  third    person 
plural,  meaning  those  in  charge  of   affairs  at  the  factory)  fills  the 
orders  and  reports  by  number,  also  name  of  customer  as  goods 
are  shipped  ;  in  fact,  renders  a  bill  to  the  Commission  Merchant, 
which  bill  is  copied  on  a  Sales  Book,  one  for  each  factory,  if  he 
represents  more  than  one  ;  and  if  he  buys  goods,  which  we  will 
call  regular  goods,  on  his  own  account,  he  would  also  have  another 
Sales  Book  for  such  goods. 

316.  The  manufacturers  make  the  prices  their  goods  must  be 
sold  at,  which  are  usually  subject  to  various  trade  discounts,  also  a 
cash  discount  for  prompt  payment. 

317.  The  Commission  Merchant  being  allowed   a  percentage 
called  Commission  on  the  net  amount  of  Factory  bill,  he  makes 
all  collections  and  adjusts  all  differences  with  the  trade,  as  cus- 
tomers are  called,  but  he  is  not  supposed  to  derive  any  benefit 
apart  from  his  regular  Commission.     Customers  taking/W£  time 
(see  page  84)  on   their  purchases  before  paying,  naturally  pay 
more  for  their  goods,  and  give  a,  better  profit  to  manufacturers. 


238  COMMISSION   BUSINESS. 

318.  To  adjust  all  these  matters  on  the  books  gives  rise  to 
complication,  which  will  require  much  study  and  retentive  thought 
to  inculcate  the  idea  and  carry  it  from  one  explanation  to  another 
to  a  final  conclusion. 

319.  The  manufacturer  must  have  full  benefit  of  the  amount 
paid  by  customers,  but  is  entitled  to  credit  by  interest  on  the  net 
amount  of  his  bill  only ;  hence  it  will  be  necessary  to  adjust  the 
difference  between  the  long  price  as  paid  by  customers  and  net 
price  charged  by  the  Factory. 

320.  An  account  must  be  kept  with  each  manufacturer,  which 
would  be  credited  by  the  monthly  footing  of  his  Sales  Book,  and 
charged  with  all  discounts  deducted  on  his  goods  by  customers  as 
they  settle. 

321.  An  extra  Account  Sales  Book  must  also  be  kept  for  each 
Factory  in  which  to  make  a  copy  of  their  bills,  and  if  they  make 
different  grades  of  goods,  on  which  they  allow  a  different  rate  of 
Commission,  there  must  be  a  column  for  each  grade  headed  by 
the  rate  of  Commission  it  is  subject  to. 

322.  On  the  total  monthly  footing  of  each  column  the  Com, 
mission  would  be  calculated,  and  the  total  Commission  on  all 
the  grades  would  be  charged  to  the  manufacturer's  account  and 
credited  Commission  in  the  following  Journal  entry. 

(Manufacturer's  name)  Dr. 

To  Commission 

323.  The  various  dates  of  bills  on  Account  Sales  Book  must  be 
averaged  (see  rule,  page  145)  monthly,  and  average  date  written 
opposite  the  total  of  all  the  columns  after  Commission  has  been 
deducted,  on  which  amount  Interest  can  be  figured  from  average 
date  to  date  of  settlement  for  the  benefit  of  the  manufacturer, 
who  would,  on  the  other  hand,  be  charged  with  Interest  on  all 
payments  on  account  from  the  date  they  were  made  (which  should 
be  averaged  also)  to  time  of  settlement. 

324.  If,  however,  the    manufacturers   expect   only    the    net 
amount  of  their  bills,  waiving  all  claim  to  discounts  that  would  be 
forfeited  by  customers  taking  full  time,  the   Commission  Mer- 
chant makes  the  discount  in  addition  to  his  regular  Commission, 
which  he  would  be  justly  entitled  to  for  carrying  his  customers, 
as  it  is  termed,  until  full  time  expired. 


A   COMMON-SENSE  VIEW   OF   BOOKKEEPING.  239 

325.  In  that  case  no  Sales  Book  would  be  needed  for  each 
Factory,  but  all  goods  would  be  charged  on  a  general  Sale*-  Book 
with  the  regular  goods,  the  total  monthly  footing  of  which  would 
be  carried  to  the  credit  side  of  Mdse.,  and  Mdse.  would  be  charged 
through  the  Journal  with  total  footing  of  Account  Sales  Book 
before  Commission  was  deducted  in  the  following  Journal  entry. 

Mdse.  Dr.  To  Sunds. 

,,    Commission 

,,   (Manufacturer's  name) 

The  latter  being  credited  by  net  amount  after  Commission  was 
deducted. 

326.  The  Manufacturers  in  some  instances  makes  the  price  at 
which  their  goods  must  be  retailed  by  the  trade  (patented  articles 
especially),  so  that  the  consumer  can  buy  the  same  article  at  the 
same  price  in  any  part  of  the  country,  and  in  any  store. 

327.  To  compass  the  desired  result,  the  goods  are  billed  to  all 
purchasers  at  the  long  or  retail  price,  and  a  trade  discount  allowed 
each  customer  according  to  the  amount  of  his  purchases,  which 
would  be  his  profit,  and  secured  by  deducting  it  at  time  of  set- 
tlements. 

328.  To  guarantee  maintenance  of  the  price,  and  prevent  those 
buying  in  large  quantities  from  under-selling  others,  the  large 
dealers   would    be  allowed  an  extra  discount,  on   the  condition 
that  they  maintain  the  price,  the  extra  discount  not  to  be  deducted 
at  the  time  of  settling  each  bill,  but  at  the  end  of  the  season,  when 
it  would  become  a  rebate  or  drawback,  which  could  all  be  deducted 
from  next  settlement,  or  if  account  had  been  paid  in  full,  the 
drawback  would  be  remitted  to  them.     The  penalty  for  under- 
selling regular  price  would  be  a  forfeiture  of  rebate,  for  which 
reason  it  is  withheld,  and  further  orders  declined. 

329.  This  would  necessitate  an  extra  memorandum  drawback 
book  of  ordinary  Journal  form.      The  customer's  name  being 
written  at  top  of  the  page,  an  itemized  account  below  of  rebatable 
goods.     This  book  would  be  journalized,  and  a  Drawback  account 
kept,  which  would  be  charged  with  total  amount  of  rebate,  and 
customers  credited  with  their  respective  rebate. 

330.  Drawback  account  would  represent  a  loss,  and  therefore 
would  be  closed  into  Profit  and  Loss  at  the  end  of  the  Season. 


240  BOOKKEEPING   SIMPLIFIED. 

FORM   OF   SHIPPING  TICKET. 


(The  name  of  the  firm  should  be  printed  here.) 

No 

Date 189.. 

Name 

Address 

Shipping  directions 


or  where  to  send  to  be  packed. 

By  whom  charged 

By  whom  packed 


Packages  to  enclose  from. 


The  ticket  would  be  of  various  lengths  according  to  the  num- 
ber of  items.  No  goods  should  be  permitted  to  leave  the  estab- 
lishment unless  directed  by  a  shipping  ticket  properly  signed  by 
the  Entry  Clerk  and  the  packer.  The  simplicity  of  it  recommends 
it  in  preference  to  a  complicated  form  given  in  a  recently  pub- 
lished scrap-book,  the  Compiler  of  which  never  had  any  experi- 
ence in  matters  of  this  kind. 


A   COMMON-SENSE   VIEW   OF  BOOKKEEPING.  241 


OFFICE  ROUTINE  ILLUSTRATED. 

The  chart  within  shows  the  origin,  progression,  and  finish  of 
the  various  and  special  duties  performed  by  each  member  of  the 
clerical  staff  in  a  model  modern  office.  The  proprietor  is  seen  at 
his  desk,  opening  his  morning  mail  (just  delivered  by  the  post- 
man, who  is  represented  as  taking  his  departure  with  letter-pouch 
swung  over  his  shoulder) ;  he  has  assorted  his  letters  in  four 
lots,  Orders,  Notes,  Remittances,  and  General  Correspondence* 
On  the  opposite  side  of  the  room  are  represented  three  men 
standing  at  a  long  high  desk,  with  stool  and  waste-basket  beside 
each,  and  three  swinging  signs,  one  over  each,  indicating  their 
different  clerkships  to  be  Bookkeeper,  Cashier,  and  Order  Clerk. 
Immediately  on  the  right  of  the  proprietor  is  seen  a  female  Cor- 
respondent,  seated  at  a  typewriter ;  farther  on,  is  seen  the  Office 
Boy,  standing  at  letter-press,  in  the  act  of  copying  letters.  The 
distribution  of  the  work  among  the  clerks  is  indicated  by  various 
darts.  One  arising  at  the  Orders  on  proprietor's  desk  describes  a 
graceful  curve  and  lands  at  Order  Clerk  •  another,  arising  at 
Remittances,  skyrocket  style,  follows  the  other,  touches  at  Cash- 
ier, and  passes  on  to  Bookkeeper.  A  third,  arising  at  Notes, 
follows  in  the  wake  of  the  other  two,  also  lands  at  Bookkeeper. 
The  General  Correspondence  is  attended  to  by  the  Typewriter, 
as  indicated  by  another  dart ;  after  leaving  her,  the  Office  Boy 
takes  charge  of  it  to  make  press  copy  of  letters,  after  which  he 
deposits  them  in  the  postman's  pouch,  which  will  of  course  show 
the  postman  in  a  double  capacity, — first  as  a  Carrier,  last  as  the 
Collector  of  mail  matter.  In  another  room  above  are  five  other 
clerks,  all  at  work.  Seated  on  a  high  stool  on  either  side  of  a  short; 
standing  desk  may  be  seen  the  Entry  Clerk  and  the  Bill  Clerk; 
near  them  a  long  counter  full  of  goods,  on  the  opposite  side  of 
which  is  seen  the  Call  Clerk,  holding  aloft  a  piece  of  goods  as  if 
examining  the  mark  and  description,  which  he  calls  off  to  the 
two  clerks  at  the  desk,  thus  completing  the  entry  and  the  Ull  at 
the  same  time. 

These  three  clerks  technically  call  themselves  "  a  team."     In 
large  establishments  there  are  many  teams  all  at  work  in  the 


rafflB|i£w<^ I     '"' 


244  A   COMMON-SENSE   VIEW   OF   BOOKKEEPING. 

same  entry  room,  hence  many  call  clerks  would  be  speaking  at 
the  same  time  in  mellifluous  and  sonorous  monotones,  enriched 
by  constant  calling,  although  making  a  perfect  Babel  of  con- 
fusion. A  stranger  entering  the  room  could  not  distinguish  one 
voice  from  another,  nor  understand  a  single  word  ;  but  each  clerk 
hears  only  his  respective  Caller,  whose  familiar  voice  has  a 
peculiarly  musical  intonation,  by  which  he  recognizes  it  even  in 
the  midst  of  chaotic  din.  After  the  goods  have  all  been  entered 
they  are  called  back,  that  is,  the  entry  clerk  reads  aloud  his  entry 
and  is  echoed  by  the  Caller  as  he  rehandles  each  article,  to 
ensure  that  none  have  been  omitted. 

The  goods  are  distributed  on  the  counter  in  lots  separated  by 
a  shipping  ticket  (for  form  see  page  240)  showing  customer's 
name  and  address,  followed  by  itemized  list  of  articles  sold  to 
him.  From  this  ticket  the  Call  Cleric  and  Shipping  Cleric  learn 
the  name  and  address,  and  the  Porter  learns  what  goods  to  pack. 
On  the  right  of  this  room  we  see  the  Porter,  with  sleeves 
rolled  up  and  uplifted  hand,  holding  a  hatchet  in  the  act  of  driving 
a  nail  in  a  large  box  over  which  he  is  leaning ;  near  by  is  seen 
the  Shipping  Cler~k,  with  brush  in  one  hand  and  marking-pot  in 
the  other,  in  the  act  of  marking  the  case  for  shipment.  The 
connection  of  the  work  in  this  room  with  that  of  the  main  office 
is  indicated  by  darts.  One,  arising  at  the  Order  Cleric,  goes 
directly  upward  to  the  Entry  Cleric  /  one  arises  at  the  Entry 
Clerk  and  goes  directly  downward  to  the  Bookkeeper;  another, 
arising  at  Bill  Clerk,  finally  lands  at  postman's  pouch. 

It  will  be  noticed  that  the  work  finally  concentrates  at  the 
Bookkeeper  s  desk  after  the  various  other  clerks  have  performed 
their  part  of  it,  thus  making  him  CHIEF  OF  THE  CLERICAL  FOKGE. 
This  pen  picture  is  true  to  life  and  shows  that  we  have  been 
there'  in  other  words,  shows  the  source  of  our  inspiration. 
"  It  seems  like  a  dream  when  we  recall 

The  misty  memories  back  to  the  light; 
The  joys  and  sorrows,  the  faith  through  all 

That  God  sets  all  things  right; 
Though  the  wheels  of  commerce  must  never  cease, 

But  continue  rolling  onward  through  countless  years, 
The  weary  toilers  will  find  release 
Above  !  where  there  are  no  tears.1' 


A   COMMON-SENSE  VIEW    OF   BOOKKEEPING.  245 

SEVENTH   AFTERTHOUGHT. 

333.  At    the    end    of    the    year  the    amount    of    Accounts 
Receivable  shows  the  face  value  or  the  actual  debit  balance  in  the 
Customer's  accounts  and  will  be  subject  to  a  cash  discount  when 
paid,  which  would  reduce  the  resources,  also  the  net  gain  that 
much,  but  as  this  will  adjust  itself  in  the  next  year's  business 
no  notice  need  be  taken  of  it  at  the  time  of  closing  unless  parties 
interested  at  that  time  will  not  be  interested  in  the  next  year's 
business,  in  which  case  the  discount  on  outstanding   accounts 
must  be  adjusted  before  closing  so  that  the  retiring  parties  may 
be  made  to  stand  their  part  of  it,  hence  the  following  journal 
entry  : 

Discount  Dr. 

To  Accounts  Receivable. 
For  6$  cash  dis.  on  unpaid  accounts  as  per  Ledger. 

This  will  necessitate  a  Ledger  account  called  Accounts  Receiv- 
able, representing  a  temporary  liability,  but  in  the  Balance  Sheet 
it  should  be  deducted  from  the  amount  customers  owe  which  is 
represented  by  Accounts  Receivable.  After  the  books  have  been 
closed  and  reopened  make  a  counter  entry,  reversing  the  above 
Journal  entry  which  will  set  the  book  straight  and  not  interfere 
with  the  regular  routine. 

EIGHTH   AFTERTHOUGHT. 

334.  The  inexperienced  have  an  idea  that  double  entry  requires 
much  more  work  than  single  entry,  but  this  is  erroneous  ;  further- 
more, the  advantages  of  double  entry  more  than  repay  for  the 
little  extra  work  it  entails. 

As  an  illustration  we  will  cite  an  actual  occurrence  in  our  own 
experience.  Our  employers  were  doing  an  extensive  wholesale 
business,  and  were  consequently  handling  many  notes  which  it 
was  necessary  to  turn  into  cash  as  soon  as  consistent  at  a  reason- 
able discount,  and  for  that  reason  they  were  left  in  the  hands  of 
note-brokers  for  sale.  This  required  no  entry  on  the  books,  but 
a  list  was  made  of  the  notes  like  the  one  on  page  134  in  the  letter 
to  the  cashier  of  the  bank  when  notes  were  offered  for  discount, 


246  BOOKKEEPING    SIMPLIFIED. 

and  a  press  copy  made  which  kept  track  of  the  notes  in  their 
hands  for  the  time  being. 

The  brokers  were  a  rich  firm,  the  result  of  40  years'  successful 
business  on  Wall  Street,  hence  they  were  prepared  to  advance 
us  nearly  the  face  value  of  the  notes  and  hold  them  until  they 
found  a  suitable  customer,  rendering  us  a  statement  as  soon  as 
a  sale  was  consummated. 

One  month  they  had  advanced  us  $30,000,  in  sums  of  $2500 
and  $3000  at  a  time,  as  we  asked  for  it.  When  they  sent  in 
their  statement  the  writer  compared  it,  a3  usual,  with  his  books, 
and  found  that  each  item  therein  contained  was  also  on  the  books, 
but  he  did  not  push  the  investigation  far  enough  to  ascertain  if 
every  item  on  the  books  was  also  on  statement,  presuming  that  a 
firm  of  their  reputation  was  very  capable  of  looking  out  for  their 
own  interest  in  the  matter  and  surely  would  not  make  an  omission 
detrimental  to  themselves. 

Upon  making  our  Trial  Balance  we  found  $2500  at  their 
credit,  when,  according  to  their  statement,  we  owed  them  nothing' 
hence  the  writer  reported  this  fact  to  his  employers,  who 
said  that  the  $2500  would  probably  appear  in  their  next  state- 
ment. Upon  receipt  of  the  next  accounting  that  was  the  first 
item  we  looked  for,  but  failed  to  find  it,  hence  it  was  again  re- 
ported to  our  employers,  who  became  alarmed  at  what  they 
thought  was  the  unreliability  of  our  ~boo~ks,  which  they  said  in 
this  instance  must  be  incorrect,  as  a  "Wall  Street  firm  doing 
millions  of  dollars'  worth  of  business  was  not  likely  to  overlook 
an  item  of  $2500  they  had  loaned. 

The  writer  reassured  his  employers  that  his  ~books  -were  abso- 
lutely correct,  as  his  Trial  Balance  proved  it,  and  that  the  error 
was  with  the  brokers  whose  Tjooks  were  evidently  kept  by  single 
entry,  a  fact  he  did  not  know  at  the  time  but  afterwards  found 
out  was  the  case. 

They  had  charged  us  with  the  $2500  on  their  cash  book 
which,  of  course,  kept  their  cash  straight,  but  they  failed  to  post 
it,  and  having  no  Trial  Balance  had  no  means  of  detecting  the 
existence  of  the  expensive  omission,  hence  they  would  have  lost 
$2500  if  we  had  not  called  their  attention  to  it. 


A  COMMON-SENSE  VIEW   OF  BOOKKEEPING.  247 

NOT    INFALLIBLE. 

335.  A  Trial  Balance  is  not  an  infallible  proof,  however,  "that 
books  are  correct;  it  only  assures  us  that  we  have  not  given  a  man 
credit  by  an  amount  that  should  have  been  charged  to  him,  or 
vice  versa.  It  also  assures  us  that  we  did  not  omit  part  of  an 
entry  in  posting.  It  does  not  even  prove  that  we  have  charged 
(or  credited)  the  right  account  in  posting.  As,  for  instance,  we 
may  have  charged  Jones  on  the  salesbook  with  $100  worth  of 
goods,  and  posted  it  to  the  debit  of  Smith's  Ledger  account  which 
would  not  affect  the  Trial  Balance,  but  Smith  would  discover  this 
error  for  us  upon  receiving  our  statement  by  denying  that  he 
owed  it.  If  we  should  credit  Jones  in  Cash-book  by  any  pay- 
ment he  makes,  and  post  it  at  the  credit  of  Smith,  in  that  case 
Jones  would  detect  our  error  for  us  by  notifying  us  that  he  had 
paid  the  amount  when  we  again  dunned  him  for  it.  If  we  post 
an  item  in  Bills  Receivable  that  belonged  in  Bills  Payable  or 
vice  versa,  neither  of  those  accounts  would  agree  with  the  Bill 
Books;  hence  the  discovery  of  the  error.  If  we  post  in  Discount 
an  item  that  belonged  in  Interest  or  any  other  speculative  account 
that  error  would  never  be  detected,  but  would  in  no  wise  affect 
our  profit,  hence  could  do  no  harm.  If  the  entry  against  Jones 
on  Sales-book  for  $100  should  be  posted  on  the  debit  side  of  any 
speculative  account  which  nray  be  on  the  same  page,  the  error 
would  never  le  discovered  unless  Jones  pays  it  unsolicited  ;  hence 
the  $100  would  be  a  clear  loss  to  us.  This  is  a  satisfactory 
reason  for  not  mixing  speculative  accounts  with  personal  ac- 
counts in  the  Ledger,  thereby  precluding  the  possibility  of  such 
an  error. 

NO  SINGLE-ENTRY  TRIAL  BALANCE. 

One  evidence  that  books  have  been  kept  by  double  entry  is 
the  fact  that  a  Trial  Balance  has  been  made  at  some  stated  timer 
even  though  it  has  not  been  repeated  with  periodical  regularity. 
This  evidence  must  be  produced  when  a  new  incumbent  assumes 
charge  of  books  that  are  in  arrears,  or  when  an  expert  is  called  in 
to  disentangle  accounts  that  have  been  badly  kept.  If  kept  by 
double  entry,  however,  and  no  Trial  Balance  has  ever  been 


248  BOOKKEEPING   SIMPLIFIED. 

made,  it  is  necessary  to  make  one ;  hence  the  origin  of  the  phrase 
Trial  Balance,  which  is  simply  a  contraction  of  the  statement, 
a  trial  is  made  to  ascertain  if  the  Ledger  will  balance.  A  Sin- 
gle-Entry Ledger  does  not  balance,  at  least  it  would  be  a  strange 
coincidence  if  it  did,  hence  it  would  be  futile  to  make  a  trial  to 
prove  a  state  of  affairs  which  it  is  safe  to  say  does  not  exist. 

Those  who  keep  books  by  Single  Entry  therefore  escape  this 
monthly  bugbear,  which  usually  haunts  conscientious  young 
bookkeepers  like  a  spectre,  especially  those  who  for  any  reason 
feel  insecure  in  their  position,  the  tenure  which  they  seem  to 
think  is  contingent  upon  a  paucity  of  errors. 

There  are  very  few  Trial  Balances  that  are  correct  in  their 
first  figures,  because  bookkeepers  who  are  pushed  to  their 
•utmost  capacity  in  keeping  up  the  current  work  cannot  observe 
the  rule  of  going  slow  but  sure.  Those  who  are  proverbial  in 
getting  off  Trial  Balance  that  is  right  first  time  are  either  slow 
workers  or  have  but  little  to  do,  giving  them  ample  time  to 
check  back  their  work  each  day.  We  always  take  it  for  granted 
that  our  work  is  correct,  and  do  not  believe  in  looking  for  errors 
until  we  have  first  seen  the  evidence  of  their  existence,  and  if 
perchance  our  Trial  Balance  comes  out  right  we  have  saved  the 
time  that  would  have  been  unnecessarily  wasted  in  checking. 
We  resort  to  that  as  a  last  expedient.  Never  borrow  trouble, 
because  sufficient  unto  the  day  is  the  evil  thereof. 


IN  LIQUIDATION. 

After  all  the  books  have  been  closed  and  the  partnership 
dissolved,  it  would  be  mutually  agreed  that  one  partner  assume 
charge  of  the  affairs  of  the  business  until  wound  up;  hence  he 
would  be  permitted  to  sign  the  firm  name  in  liquidation  of  its 
debts.  For  that  reason  the  books  would  be  reopened  and  con- 
tinued until  the  assets  were  all  converted  into  cash  and  the  lia- 
bilities were  all  discharged,  in  doing  which  the  accounts  would 
be  balanced  by  concurrence  of  regular  entries,  then  closed  in  the 
usual  way. 


JOINT  STOCK  ACCOUNTS. 

336.  The  growing  tendency  among  leading  concerns  through- 
out the  country  to  reorganize  on  the  incorporated  plan  has  given 
a  new  impetus  to  the  research  for  information  relative  to  this 
subject. 

We  are  free  to  admit  in  the  outset  that  our  version  of  the 
matter  is  in  many  respects  different  from  the  usual  stereotyped 
way  of  discussing  it,  but  in  view  of  the  fact  that  this  is  an  age  of 
improvements,  and  that  all  are  seeking  more  light  and  better 
methods,  we  are  nothing  daunted. 

337.  Formerly  the  little  grains  of  wheat  were  thrashed  from 
the  husks  by  means  of  ^  flail  ^  this  laborious  method  was  greatly 
improved  by  riding  over  the  sheaves  until  the  grains  were  dis- 
lodged from  their  cereal  strongholds  or  petite  homes;  finally  an 
inventive  genius  gave  us  the  Thrashing  Machine. 

There  was  a  time  when  remittances  came  by  the  slow  and 
rickety  old  stage  coach ;  now  requests  to  please  remit  come  by 
lightning  express.  We  would  be  zealous  advocates  of  the  pio- 
neer way  in  this  case  if  the  occasions  could  be  reversed ! 

In  years  agone  our  way  was  illumined  by  the  dim  light  of 
the  candle-wick ;  now  we  think  we  are  in  the  dark  unless  every' 
thing  is  ablaze  with  myriad  electric  jets. 

These  illustrations  of  course  have  no  bearing  on  the  subject 
under  discussion,  but  they  illustrate  felicitously  the  old  fashion, 
slow  way  of  doing  things  and  emphasize  by  contrast  the  onward 
march  of  improvements. 

It  should  not  be  a  question  as  to  how  things  are  usually  done 
by  others  who  may  not  know  the  best  way,  but  how  they  can 
be  accomplished  in  a  letter  way  and  with  less  work  without  im- 
moiating  correctness  on  the  altar  of  brevity. 

338.  On  the  principle  that  there  is  strength  in  union  and 
that  it  requires  much  capital  to  operate  on  an  extensive  scale  or 
carry  on  colossal  enterprises,  a  number  of  persons  form  a  Cor- 


250  BOOKKEEPING    SIMPLIFIED. 

poration  called  Joint  Stock  Company,  with  a  view  of  combining 
the  capital  of  many,  the  interest  of  each  being  represented  by 
what  is  technically  called  Shares,  thus  securing  the  advantage  of 
a  maximum  profit  producing  fund  with  a  minimum  individual 
risk,  which  is  distributed  according  to  the  amount  in  Shares  held 
by  each. 

339.  There  are  two  kinds  of  Stock  Companies,  one  being 
distinguished  from  the  other  by  the  word  "limited"  appearing 
after  and  in  connection  with  the  corporation  name  and  which 
signifies  that  each  Stockholder's  liability  is  limited  by  the  amount 
of  stock  he  owns.     The  omission  of  the  word  "  limited  "  means 
that  it  is  a  full  liability  Company  :  in  the  event  that  the  Company 
cannot,  for   lack  of  resources,  be  enforced  by  process  of  law  to 
meet  its  obligations,  action  can  be  brought  against  the    Stock- 
holders individually  and  the  amount  recovered  to  the  full  extent 
of  their  entire  worth. 

340.  The  different  States  have  different  laws  regulating  the 
formation  of  such  companies,  what  that  law  is  does  not  come 
within  the  scope  of  a  work  of  this  kind  to  define;  in  fact  the 
writer  is  unequal  to  the  task  of  expounding  the  law  or  undertak- 
ing a  forensic  dissertation,  the  only  law  that  engrosses  his  atten- 
tion being  the  irrepealable  law  of  double  entry,  which  governs 
the  science  of  accounts  alike  in  Joint  Stock  Companies  and  ordi- 
nary Copartnerships. 

341.  A  slight  digression  here  is  pardonable  to  establish  the 
fact  that  there  is  out  one  system  of  double  entry  that  of  debits 
and  credits  known  as  the  Italian  System.     There  are  many  dif- 
ferent ways  of  applying  this  system,  however,  each  of  which  may 
be  termed  a  ROUTINE  or  METHOD.     It  is  supremely  egotistical  and 
fallacious  for  any  one  to  state  that  he  has  a  new  system. 

342.  Keeping  books  simply  means  keeping  accounts  properly 
debited   or  credited  as  the  case  requires,  according   to  the  only 
known  system   of  double   entry.      What    accounts   to   keep   is 
one   thing,  and  how  to  keep  them  is  another ;  hence  keeping 
books  for  Joint  Stock  Companies  is  no  more  difficult  than  for 
single  copartnerships,  as  they  are   conducted  according  to  the 
same   routine   already  explained    in    our  eighteen   lessons,  dif- 


A   COMMON-SENuE   VIP^W    OF   BOOKKEEPING. 


251 


fering  only  in  the  manner  of  opening  and  final  adjustment  of 
the  profit  or  loss. 

343.  The  difficulty   seems   to  arise  in  determining  what  ac- 
counts to  keep,  not  in  keeping  them.     There  will    be  accounts 
with  persons  who  owe  the  Company  and  whom  the  Company  owes, 
the  former  showing  resources  and  the  latter  showing  liabilities, 
accounts  for  property  owned  by   the   Company  also    showing 
resources.     There  will  also  be  accounts  representing  percentages 
of  gain  or  loss. 

Thus  we  have/bw  known  representations :  assets,  liabilities, 
losses,  gains,  separate  and  distinct  in  their  nature.  Each  account 
must  show  definitely  one  of  the  four:  the  appearance  of  any 
other  name  on  the  books  in  the  position  of  an  account  would  be 
nil,  hence  should  not  be  there. 

344.  The  names  of  accounts  are  suggested    by  those  in  au- 
thority and  not  created  at  the  option  of  the  bookkeeper  as  ex- 
plained on  page  32  (see  italics),  unless  by  virtue  of  his  technical 
knowledge  he  is  appealed  to  to  decide  what  the  technical  names 
are  that  would  be  most  appropriate  to  the  occasion.  The  accounts 
once  decided  upon  the  initial  entries  next  demand  attention,  and 
they  will  depend  upon  many  contingencies  relative  to  the  capital 
of  the  Concern  and  the  plan  of  its  organization  as  follows  : 

STOCK    ALL    TAKEN  AND  PAID    FOR. 

345.  In   this  case  the   principal   account  would  be     Capital 
Stock  and  the  initial  entry  would  be   made  on  the  debit  side  of 
the  Cash  Book  thereby  charging  cash  and  CREDITING  the  CAPITAL 
STOCK  accounts  as  follows: 


DR.                                                     CASH. 

1891        folio                                                                                   Discount,  Mdse.,  Sunds.  Amts, 

Oct. 

1 

To  Capital  Stock. 

On   this  side  of  the 

line  within   this  space 

each  Sto  c  k  h  o  1  d  e  r's 

* 

name  will  appear,  each 

on  a  line  by  itself  with 

the  number  of  shares, 

rate     per     share     and 

amount  paid   by  each 

on  same  line  with  name 

and   the   total  paid  by 

all  extended  here. 

000000 

252 


BOOKKEEPING   SIMPLIFIED. 


This  would  open  the  Ledger  with  Cash  as  a  resource  and 
Capital  Stock  as  a  liability. 

346.  The   Stockholders'  names   would    not   appear  in    this 
Ledger,  but  in  the 

STOCKHOLDERS'  LEDGER 

an  account  would  be  opened  with  each  and  credited  by  the 
number  and  amouut  of  Shares  belonging  to  him.  This  book  is 
of  the  same  general  plan  as  an  ordinary  Ledger  with  an  extra 
column  introduced  after  date  column  for  No.  of  Certificate.  The 
usual  space  for  descriptive  matter  can  be  used  for  Number  of 
Shares  and  to  whom  transferred,  the  folio  Column  for  rate  per 
share,  and  the  Amount  Column  being  already  properly  arranged. 
The  extra  column  can  be  ruled  in  regular  Ledger  by  the  book- 
keeper. This  book  is  kept  by  single  entry  and  has  no  connec- 
tion with  the  double  entry  books. 

347.  If  part  of  the  money  is  subsequently  paid  for  a  Patent, 
Plant,  or  Franchise,  that  would  give  rise  to  a  new  account  called 
by  one  of  those  names,  that  is  if  it  was  a  patented  article  it  would 
be  called  Patent,  if  it  was  property  consisting  of  real  estate  and 
improvements  thereon,  it  would  be  called  Plant,  if  it  referred  to 
a  right  conceded  and  acquired  by  law  it  would  be  called  a  Fran- 
chise. 

The  new  account  would  be  charged  with  the  money  given  in 
exchange  for  that  which  it  represents  on  the  credit  side  of  the 
Cash  Book  thus : 


CASH. 


1891         Folio. 


CR. 

Discount,  Expense,  Sunds.,  Amts. 


Sept. 

1 

By  Patent. 

On  this  side  of  the 
Hue  within  this  space 
describe  the  Patent. 
Extend  the  amount 
paid  for  it  here. 

000 

00 

The  new  account  thus  created  would  represent  an  asset,  no 
liability  being  incurred  by  the  transaction  which  simply  changes 
the  assets  from  Cash  representation  to  the  new  account. 


A    COMMON-SENSE   VIEW    OF   BOOKKEEPING. 


253 


STOCK  NOT  ALL  TAKEN. 

348.  This  gives  rise  to  three  known   quantities,  viz. :  Stock 
sold,  unsold  and  the  total,  each  of  which  must  have  a  name  to 
represent  it  (see  1st  contingency  on  page  31).     Hence  the  dif- 
ficulty encountered    by  the  inexperienced    in  deciding   upon  a 
name  that  will  appropriately  represent  each  (see  paragraph  343). 
Some  have  very  little  regard  for  appropriateness  in  the  selection 
of  names,  as  it  appears  from  their  methods.     True  enough,  a  rose 
would  smell  just  as  sweetly  by  any  other  name. 

349.  According  to  one  method   which,  at   least,  has  the   re- 
deeming characteristic   of  originality,  the  Stock  Sold  is   repre- 
sented by  Capital  Stock,  which  is  appropriate  and  proper,  and  is 
credited.     Unsold   Stock  is  represented  by   Working  Capital,  a 
grievous  misnomer,  and  is  also  credited.     It  seems  that  nothing 
but  a  dearth  of  synonyms  could  suggest  a  title  so  inappropriate 
as  Working  Capital  for  unsold  stock.  The  total  of  both  or  the  full 
amount   of   capitalization    is  represented    by  franchise,  and    is 
debited.     This  account  is  supposed  to  remain  a  permanent  debtor 
on  the  Ledger,  we  know  not  why,  and  the  promulgator  of  this 
theory  has  failed  to  enlighten  us.     This  necessitates  the  creation 
of   a  fictitious  account   called    Contingencies,  which  is  credited 
when   the  money  is  received  and   CHARGED   (debited)  to    Cash. 
Now  what  can  this  Contingencies  account  represent  ?     Let  us  see. 
All  credits  must  represent  either  a  gain  or  a  liability  (see  para- 
graph 343),  and  yet  here  is  a  permanent  credit  that  means  neither  ; 
it  cannot  mean  a  gain,  as  the  money  was  not  for  percentage  made, 
but  for  certificates  given  in  exchange  for  it,  for  which  reason  we 
owe  no  one,  and  hence  it  cannot  mean  a  liability  (see  2d  and 
7th  principles  on  page  33).     The  fact  is,  no  such  account  should 
be  on  the  books ;  its  appearance  there  is  an  unpardonable  infrac- 
tion of  the  laws  that  govern  the  science  of  accounting. 

350.  Another  method  represents   the  Stock  Sold  by  a   Sub- 
scription account  which  is  debited,  and  the  unsold  stock  is  repre- 
sented by  Treasury  Stock,  and  is  also  debited, ;  the  total  of  both  is 
represented  by  Capital  Stock,  and  is  credited. 

351.  The  latter  representation  is,  to  say  the  least,  incorrect,  as 


254 


BOOKKEEPING   SIMPLIFIED. 


Capital  Stock  literally  means  the  fund  represented  by  certificates 
that  have  been  issued.  Subscription  is  entirely  superfluous  and 
should  not  be  used.  Treasury  Stock,  if  used  at  all,  should  rep- 
resent a  credit.  It  will  be  noticed  that  according  to  the  former 
method  there  is  one  debtor  and  tivo  creditors  and  according  to  the 
latter  method  there  are  two  debtors  and  one  creditor,  as  one  is 
just  the  reverse  of  the  other,  we  must  be  permitted  to  think, 
with  all  due  respect  for  each,  that  both  cannot  be  right. 

352.  "We  would  make  the  following  journal  entry,  unless  re- 
quired by  the  management  to  do  otherwise  : 

Stock  Certificates  Dr.  To  Sundries. 

To  Capital  Stock. 

For Shares  @  $ —  per  share  of  the  authorized  capital  of  the 

Co.,  sold  to  and  to  be  paid  for  in  cash  at  par  by  the  following 

stockholders  (name  them  here). 

To  Surplus  Stock. 
For Shares  @  $—  per  share  on  hand  to  be  sold. 

353.  As  the  above  Stockholders  pay  for  their  shares  we  would 


V^lJcll  iivy    \S\JVOIV     ClllVl     \J  1  \J\AJVV     A-/t'V/V/t/      \_/V/   V  VlV^j\JVVi^/U     CAO     J.V/1AV/  VV  O    • 

DR.                                                           CASH. 

1891    Folio.                                                                               Disc't.    Mdse.    Sund's  Amt's. 

Oct. 

1 

To  Stock  Cekificates 

On  this  side 

of  the  line  with- 

in   this    space 

give  the  name 

of    the    stock- 

holder, each  on 

a  line  by  itself, 

number  of 

shares    deliver- 

ed to  each,  rate 

per  share,  and 

amount  on 

same  line  with 

his   name,    ex- 

tending     total 

here. 

000 

00 

Thus    we    dispense    with     the     objectionable    Contingencies 
account. 

354.  As  the  surplus  stock  is  sold,  and  certificates  are  issued, 


A    COMMON-SENSE   VIEW    OF   BOOKKEEPING.  255 

it    becomes    part    of    the    Capital    Stock,  hence    this    journal 
entry. 

Surplus  Stock,  Dr. 

To  Capital  Stock. 

For Shares  @.  $ —  per  share  of  the  Surplus  Stock  sold  to  and  to  be 

paid  for  at  par  by  the  following  Stockholders  (name  them  here). 

As  the  new  Stockholders  pay  for  their  Shares  and  receive 
their  certificates,  we  would  charge  cash  and  credit  Stock  Certifi- 
cates as  before. 

When  the  Surplus  Stock  is  all  sold  and  certificates  are  issued 
for  it,  both  the  Stock  Certificates  and  the  Surplus  Stock  accounts 
will  balance  and  the  Capital  Stock  will  show  a  credit  for  the  full 
amount  of  capitalization. 

355.  In  justification  of  our  entry  we  call  attention  to  the  fact 
that  the  certificates  of  Stock  are  the  property  of  the  Company 
and   therefore  assets.     The   full   amount   of  authorized  Capital 
represented  by  these  certificates  is  a  liability  either  while  they 
are  on  hand  subject  to  sale  or  as  they  disappear  by  issuance  to  the 
Stockholders.     By  our  entry  we  dispense  with  the  superfluous 
permanent    Franchise  debtor,  also  the  equally  superfluous  Sub. 
scription  account,  and  substitute   for  Working  Capital  a  name 
that  is  far  more  appropriate,  because  it  shows  upon  its  face  what 
it  represents — surplus  Stock,  because  it  shows  excess  beyond  what 
is  wanted  of  the  Stock  at  present,  whereas  Working  Capital  mis- 
leads us  or  implies  as  a  natural  sequence  that  the  Capital  Stock 
which  is  supposed  to  be  the  real  working  Capital,  is  to  be  idle. 
Our  Capital  Stock  account  shows  the  actual  amount  for  which 
certificates  have  been  issued  and  represents  the  profit  producing 
fund  on  which  dividends  will  be  declared. 

356.  If  the  patentee  or  any  vender  accept  Stock  in  lieu  of 
their  right  or  transfer  to  the  Company  that  would  require  an 
entry  in  the  journal  as  follows  : 

Patent  (Plant  or  Franchise)  Dr. 

To  Stock  Certificates. 
[Explaining  here  the  number  of  Shares  that  were  given  in  exchange  for  it.'J 

No  new  liability  has  been  or  can  be  incurred  in  disposing  of 
the  Certificates,  but  the  assets  change  in  their  representation. 

357.  To  set  at  rest  the  mooted  question  whether  Capital  Stock 


256 


BOOKKEEPING   SIMPLIFIED. 


should  show  authorized  capital  or  paid  up  capital,  it  is  only  neces- 
sary to  take  into  consideration  the  fact  that  keeping  books  means 
recording  facts,  and  as  authorized  capital  and  paid-up  capital 
are  both  established  facts,  both  must  be  represented  on  the  books 
in  some  shape ;  not  to  do  so  would  be  to  pervert  the  record  to 
that  extent.  The  Capital  Stock  account,  however,  does  not 
necessarily  show  either  paid-up  capital  or  authorized  capital,  but 
the  actual  amount  for  which  Certificates  have  been  issued  and 
which  may  not  be  paid  for  at  the  time  of  opening  the  Capital 
Stock  account. 


STOCK  ALL  TAKEN  AND  TO  BE  PAID  BY 
INSTALLMENTS. 

358.  This  would  require  a  journal  entry  as  follows : 
Stockholders,  Dr. 

To  Capital  Stock. 

Give  the  number  of  shares,  the  name  of  the  Company,  rate  per  share,  fol- 
lowed by  each  stockholder's  name  and  the  number  of  shares  sold  to  each;  then 
explain  how  the  payments  are  to  be  made— that  is,  how  many  installments  and 
when  they  are  due. 

359.  Then  in  the  Stockholder's  Ledger  each  stockholder  will 
be  charged  with  the  number  of  shares  subscribed  for.     It  is  cer- 
tainly better  to  call  the  account  Stockholder's  than  to  call  it  Sub- 
scription or  by  any  subterfuge,  as  it  will  show  upon  its  face  the 
actual  debtors. 

360.  When  the  installments  are  paid  an  entry  is  made  on  the 
debit  side  of  the  Cash  Book  as  follows : 


Dr.                                                       CASH. 

1891      Folio.                                                                        Disc't.        Mdse.     Sund's.       Am1 

Oct. 

1 

To  Stockholders 

On  this  side 

give  the  num- 
ber of  Install- 

ment, followed 

by  each  stock- 

holder's n&^ie, 

each  on  a  sepa 

rate   line  with 

amount  paid  by 

each    on   same 

line  and    total 

paid  by  all  ex- 

tended here. 

000 

00 

A    COMMON-SENSE   VIEW    OF   BOOKKEEPING. 


257 


361.  When  the  installments  have  all  been  paid  the  Stock- 
holder's account  will  balance  and  as  each  Stockholder-ledger  ac- 
count will  be  credited  at  the  time  each  payment  is  made  their 
accounts  will  also  balance  with  last  payment  and  then  should  be 
closed  by  underlining  and  the  full  amount  brought  down  on  the 
credit  side  of  each  account  duplicating  the  first  entry  on  the 
debit  side.  There  could  be  no  advantage  in  opening  three  or 
four  Installment  accounts  as  debtors  when  the  stockholders  are 
the  debtors,  and  their  account  can  just  as  well  be  credited  by  the 
various  payments  as  they  are  made  as  to  be  credited  by  Install- 
ments through  a  journal  entry. 


REORGANIZING  AS  A  STOCK  COMPANY. 

362.  When  it  is  desired  to  change  an  ordinary  copartnership 
into  a  joint  stock  company  the  books  of  the  old  concern  must  be 
closed  and  the  profit  or  loss  adjusted  according  to  the  rules  on 
pages  43,  44,  and  45,  then  the  assets,  liabilities,  and  net  capital 
must  be  transferred  to  the  new  books,  requiring  one  journal 
entry  each  on  the  old  and  new  books.     See  THIRD  ENTRY. 

363.  We   assume    that   the  firm  of  P.  A.  Wright  &  Co.  re- 
organize as  The  Noble  M'f  g  Co.  with  an  authorized  capital  of 
$25,000  divided  into  250  shares  of  •  $100  each,  200  of   which 
have  been  placed  and  are  to  be  paid  for,  half  in  cash  and  balance 
within  30  days,  as  follows :  P.  A.  Wright,  50 ;  T.  P.  JSToble,  50 ; 
W.  D.  Showalter,  25 ;   A.  J.  Kinmonth,  25 ;    Emerson  De  Puy, 
25 ;  Joseph  Sheridan,  25 ;  the  other  50  remaining  unsold  and  in 
the  treasury.     We  would  open  the  new  books  with  the  following 
journal  entries : 

FIRST  ENTRY. 


Stock  Certificates,  Dr.  To  Sundries 

To  Capital  Stock 

For  200  shares   of  the   Capital  Stock  of  The 
Noble  M'f'g  Co.,  to  be  paid  for  at  par  value, 

$100  per  share,  distributed  as  follows  : 

P.  A.  Wright,  50,       W.  D.  Showalter,  25, 
Jos.  Sheridan,  25,        T.  P.  Noble,  50, 
A.  J.  Kinmonth,  25,    E.  De  Puy,  25. 

To  Surplus  Stock 

For  50  shares  unsold  stock. . 


$25000 


00 


$20000 


5000 


00 


00 


258 


BOOKKEEPING   SIMPLIFIED. 
SECOND  ENTRY. 


Stockholders,  Dr , 

To  Stock  Certificates 

For  200  shares  of  the   Capital   Stock   of  The 

Noble  M'fg  Co.  sold  at  par,  $100  per  share, 

to  be  paid  in  cash  as  follows : 

P.  A.  Wright 50  shares  @  100,  $5000 

T.  P.Noble 50      "      @  100,    5000 

W.  D.  Showaller 25      "      @  100,    2500 

A.  J.  KinmoQth 25      "      @  100, 

J.Sheridan 25      "      (&  100, 


E.  De  Puy. 


,25 


2500 
2500 
@100,    2500 


20000 


00 


2000 


00 


As  the  stockholders  pay  the  money  it  would  be  entered  the 
same  as  in  paragraph  360. 

364.  In  transferring  the  accounts  from  the  old  books  of  P. 
A.  Wright  &  Co.,  as  shown  by  their  Balance  Sheet,  page  117,  to 
the  books  of  the  new  Company  we  would  make  the  following 
Journal  Entry : 

THIRD    ENTRY. 


Sundries  Dr.  To  Sundries  : 

Accounts  Receivable 

Bills  Receivable 

Cash 

Mdse 

Office  Furniture 

To  P.  A.  Wright. . . . 

"T.  P.  Noble 

"  Accounts  Payable 
"  Bills  Payable 


$1382  35 

10000 

15550 

7300  00 

24500 


$151042 

1007i08 

616535 

50000 


The  above  being  a  correct  statement  of  the  affairs  of  the 
late  firm  of  P.  A.  Wright  &  Co.,  which  have  been  trans- 
ferred to  and  assumed  by  The  Noble  M'f'g  Co. 


365.  In  order  to  close  the  old  books  of  P.  A.  Wright  &  Co.,  we 
would  make  a  Counter  Entry  to  the  above,  that  is  reversing  the 
debits  and  the  'credits,  thus  dispensing  with  the  superfluous 
account  of  The  Noble  Mfg.  Co.  on  the  old  books,  having  but  one 
debit  and  one  credit  which  would  fulfil  its  purpose  and  then  it 
would  be  practically  retired  by  underlining. 


A    COMMON-SENSE    VIEW    OF   BOOKKEEPING. 


259 


FOURTH  ENTRY. 


Sundries  Dr.  To  Stockholders, 
P.  A.  Wright,  15  Shares  @  $100, 
T.  P.  Noble,  10  Shares  @  $100, 


2,500.00, 
1,500.00, 
1,000.00— 


For  their  interest  in  the  old  concern  of  P.  A.  Wright  &  Co., 
the  balance  of  which  will  be  paid  them  in  cash.  After  posting 
this  entry  also  the  entries  that  will  be  made  on  the  credit  side  of 
the  Cash  Book  when  P.  A.  W.  is  paid  $10.42  and  T.  P.  JST.  is 
paid  $7.08,  their  accounts  will  balance  and  should  be  closed  on 
the  main  Ledger  as  they  appear  on  the  Stockholders'  Ledger  with 
the  others.  This  will  leave  a  debit  balance  of  $17,500  in  the 
Stockholders'  account  and  show  the  amount  of  actual  cash  to  be 
paid  in,  which  when  done  will  balance  that  account,  after  which 
it  should  be  closed. 

366.  We  believe  it  is  the  custom  according  to  other  methods 
to  make  the  two  following  entries  in  closing  the  old  books: 


The  Noble  Mfg.  Co. 

Dr  To  Sundries 

9182 

1510 
1007 
6165 
500 

85 

42 
08 
85 
00 

1382 
100 
155 
7300 
245 

9182 

85 
00 
50 
00 
00 

8? 

"  Acct's  Receivable  .       ... 

'*  Bills  Receivable  

"Cash  

"  Mdse  

"  Office  Furniture  

Sundries  Dr.  To  The 
P   A    Wright.  . 

5  Noble  Mf  g  Co      

T   P  Noble 

Acct's  Payable 

Bills  Pa3rable.  .  . 

367.  Thus  it  will  be  seen  that  in  posting  it  necessitates  the 
superfluous  account  of  The  Noble  Mfg.  Co.,  in  which  there 
can  be  no  possible  advantage  as  the  balance  of  the  Entry  is 
conveyed  to  its  proper  places  just  as  it  would  be  according  to  our 
THIRD  ENTRY.  The  intelligent  reader  can  easily  decide  which 
method  is  apace  with  the  lightning  express  and  in  the  light  of 
electricity,  ours  or  the  usual  stereotyped  method. 


260  BOOKKEEPING   SIMPLIFIED. 

REDUCING    OR    INCREASING   CAPITAL   STOCK. 

368.  All  companies  are  managed  by  a  board  of  directors  who 
draught  their  own  by-laws,  which  must  be  in  accord  with  the  laws 
of  the  State.  When  it  is  decided  to  increase  or  decrease  the 
Capital  Stock,  there  is  a  call  meeting  of  the  board  of  directors. 

If  the  Noble  Mfg.  Co.  conclude  to  cancel  the  certificates  for 
the  50  Shares  of  unsold  Stock,  thereby  reducing  their  Capital  to 
$20,000,  the  following  Journal  entry  is  in  order  ; 

Surplus  Stock,  Dr.,  5,000.00 

To  Stock  Certificates,  5, 000; 00. 

or  if  on  the  other  hand  they  conclude  to  increase  the  Capital  to 
$30,000,  we  would  reverse  the  above  entry,  in  which  case  there 
would  be  100  shares  remaining  in  the  treasury  for  sale,  and 
represented  by  a  debit  balance  of  $10,000  in  the  Stock  Certificates 
account. 


BONDS  AND  MORTGAGES. 

369.  If  at  any  time  the  Company  executes  a  mortgage  on  its 
property  to  secure  the  payment  of  borrowed  money  it  would 
also  be  accompanied  by  the  company's  note,  and  to  keep  it  apart 
from  the  regular   Bills   Payable   account  a   Mortgage   account 
would  be  opened  and  credited  by  the  amount  received  requiring 
an  entry  on  the  debit  side  of  the  Cash  Book,  thus : 

To  Mortgage  (giving  name  of  mortgagee  here.) 

370.  If  the  Company  issues  interest-bearing  bonds  and  places 
them  in  the  hands  of  a  trustee  for  sale,  that  would  give  rise  to  a 
Bond  account  which  must  be  credited,  also  an  account  in  the  name 
of  the  trustee  which  must  be  charged  in  the  following  Journal 

Entry. 

(Name  here)  Trustee  Dr. 

To  Bonds. 

Describing  here  the  bonds  left  in  his  custody.* 

To  call  the  account  Trustee,  simply,  as  suggested  in  other 
publications  would  be  inadequate,  partaking  of  the  nature  of  an 

*  A  better  way  is  to  make  no  entry  when  the  Bonds  are  left  with  the 
Trustee,  but  treat  the  matter  the  same  as  in  case  of  notes  in  paragraph  334  until 
the  Bonds  are  sold,  then  charge  Cash  and  credit  Bonds  with  the  money. 


A   COMMON-SENSE   VIEW   OF   BOOKKEEPING. 


261 


algebraic  quantity,  that  is  the  name  of  the  custodian  of  the  bonds 
would  be  unknown  when  it  became  necessary  to  commirrricttte 
with  him,  hence  his  name  must  appear  in  the  blank  space  shown 
in  the  entry  and  thereby  become  part  of  the  Ledger  title. 

371.  As  he  turned  in  money  for  the  bonds  his  account  would 
be  credited  requiring  an  entry  on  the  debit  side  of  Cash  Book, 
thus — (Dr.  Cash  at  top  of  page.  See  paragraph  345). 

To Trustee  (giving  description  of  bonds  sold  liere). 

As  the  bonds  matured  and  were  paid  the  Bowls  account  would 
be  charged  (debited)  requiring  an  entry  on  the  credit  side  of  the 
Cash  Book  thus — (Cash  Cr.  at  top  of  page.     See  paragraph  347). 
By  Bonds  (stating  here  what  bonds  were  redeemed.) 

In  fact  the  Bonds  account  would  be  treated  in  every  respect 
the  same  as  Bills  Payable. 


STOCK  SOLD  AT  A  PREMIUM  OR  BELOW  PAR. 

372.  If  part  of  the  surplus  stock  is  sold  above  par,  Sinking 
Fund  gets  the  benefit  of  the  premium  through  the  Cash  Book, 
but  we  must  first  make  this  journal  entry  to  keep  Capital  Stock 
straight. 

Surplus  Stock,  Dr. 

To  Capital  Stock. 

shares  of  the  Capital  Stock  sold  at  $ for  cash  to  the  following 

Stockholders  (name  them). 

373.  Then,  upon  receipt  of  the  money,  we  make  two  entries 
in  the  Cash  Book  as  follows : 


Dr.                                                       CASH. 

1891    Folio.                                                                       Disc't.      Mdse.      Sund's.    Am'ts. 

Oct. 

1 

To  Stock  Certificates 
"  Sinking  Fund 

Par  value 
of  —  shares 
sold  to  
@.  $  per 
share  .  .  . 

000 
00 

00 
00 

—  per  cent 
premium  on 
shares  above. 

262 


BOOKKEEPING   SIMPLIFIED. 


374.  If  sold  below  par  Sinking  Fund  would  have  to  stand 
the  loss  bj  being  charged  with  the  discount  on  the  credit  side  of 
Cash  Book  as  though  that  much  had  been  refunded  to  the  buyer. 
First  make  the  same  journal  entry  as  above  (except  as  to  ex- 
planation, of  course),  because  Capital  Stock  must  show  par  value, 
which  throws  the  Surplus  Stock  into  actual  Capital  Stock  when 
the  certificates  are  issued  ;  then,  upon  receipt  of  the  money,  it 
would  be  entered  on  the  debit  side  of  Cash  Book  as  though  full 
face  value  of  the  certificate  had  been  received,  in  order  to  keep 
the  Stock  Certificate  account  straight,  explaining,  of  course,  that 

per  cent  was  deducted  and  entered  on  credit  side  of  Cash 

Book  as  follows : 


1891    Folio. 


CASH.  Or. 

Disc't.    Expense.    Sund's.   Am'ts. 


Oct. 

1 

By  Sinking  Fund 

per  cent 
discount  on  

shares    sold     to 

.    See  other 

side. 

00 

00 

STOCK   GIVEN  AWAY. 

375.  If  part  of  the  Surplus  Stock  is  given  away,  that  would 
require  two  journal  entries  as  follows  : 

Sinking  Fund,  Dr. 

To  Stock  Certificates. 

— —  shares  of  the  Capital  Stock  of Co.  given  to . 

Surplus  Stock,  Dr. 

To  Capital  Stock. 

•        shares  of  Surplus  Stock  given  to .     See  above. 

Sinking  Fund,  was  provided  for   emergencies,    hence  can  be 
made  to  cover  a  multitude  of  things. 


A   COMMON-SENSE   VIEW   OF  BOOKKEEPING.  263 

NOMINAL  AND  ACTUAL  CAPITAL. 

376.  Suppose  a  Company  is  formed  with  a  nominal  capital 
of  $100,000,  but  an  actual  capital  of  only  $75,000;    that  is,  it  is 
agreed  that  upon  payment  of  75^,  certificates  for  full  amount  are 
to  be  issued,  stock  all  taken   by  the  incorporators.     This  gives 
rise  to  two  accounts,  one  representing  resources  and  the  other 
liabilities,  which  are  disposed  of  in  the  following  simple  journal 
entry  : 

Stockholders,  Dr.,  100,000.00. 

To  Capital  Stock,  100,000.00. 

Giving  here  the  names  of  all  the  Stockholders  and  the  number  of  shares 
taken  by  each,  stating  that  75$  only  is  to  be  paid  in. 

When  the  $75,000  is  paid  it  will  be  entered  on  the  debit  side 
of  the  Cash  Book  and  reach  the  credit  side  of  the  Stockholders' 
account  in  the  Ledger,  leaving  a  debit  balance  in  that  account  of 
$25,000  representing  nominal  assets  until  finally  extinguished  by 
a  credit  from  a  sinking  fund  that  would  be  provided  out  of  the 
profits  of  the  business. 

377.  It  is  amusing  to  witness  the  unskilled  fencing  tvith  en- 
tries indulged  in  by  others,  involving  numerous  unnecessary  ac- 
counts, in  disposing  of  this  matter.     For  example,  one  following 
the  beaten  track  of  his  predecessors  suggests  charging  the  75$ 
to  a  Subscription  account  and  the  25$  to  a  Commission  account, 
the  former  being  credited  and  balanced  when   the  $75,000  is 
paid,  the  latter  remaining  a  mysterious  debit  of  $25,000 — neces- 
sarily mysterious  because  of  the  mappropriateness  of  the  name 
adopted  to  represent  it,  making  it  appear  as  a  loss  when  it  is  in 
fact  an  asset. 

378.  The   Stockholders   owe   themselves    the    $25,000,   arid 
eventually  pay  it  indirectly  out  of  accrued  profits  which  would 
have  been  $25,000  greater  and  paid  to  them  in  dividends  had  no 
sinking  fund  been  created  ;  hence  it  is  better  represented  under 
the  heading  of  Stockholders'  than  a  subterfuge  or  misnomer. 

There  could  be  no  possible  advantage  or  object  in  having  two 
debtors  in  this  matter. 


264  BOOKKEEPING    SIMPLIFIED. 

DIVIDEND  AND  SINKING  FUND. 

379.  DIVIDEND  is  a  pro  rata  division  of  profits  among  Stock- 
holders.    The  rate  per  cent  is    determined    by  multiplying   the 
sum  to  be  distributed  by  100  and  dividing  the  product  by  the 
amount  of  Capital  Stock;    then  by  multiplying  the  amount  of 
Stock  held   by  each  by  the  rate,  will  give  his  pro  rata  of  the 
profits.     SINKING    FUND  is  a   special  sum    set  apart    from   the 
profits  for  special  purposes  or  possible  emergencies. 

380.  The  universal  custom  again  ushers  us  into  a  labyrinth  of 
superfluities  at  the  time  of  closing  Joint  Stock  Books.     It  ad- 
raits  us  at  Profit  and  Loss,  then  conducts  us  through  the  wind- 
ing passage  of  many  unnecessary  entries  to  reach  an  exit  at  Sur- 
plus.     We  refuse  to  thus  mislead  OUT  readers,  but  rather  assist 
them  to  make  their  escape  at  the  place  of  entrance. 

381.  In   other  words   after   the   Speculative  accounts    have 
all  been  closed  into  Profit  and  Loss  according  to  rules  on  pages 
43,  44  and  45,  we  argue  that  the  matter  should  rest  there  until  the 
amount  of  dividend  is  decided  upon,  and  not  be  carried  into  a 
Surplus  account,  which  would  certainly  be  a  surplus  proceeding. 
If  the  credit  side  of  the  Profit  and  Loss  account  is  the  greater,  it 
will  show  a  surplus  and  is  properly  represented  where  it  is  as 
much  so  as  if  it  appeared  under  a  Surplus  heading.     If  the  debit 
side  of  Profit  and  Loss  is  the  greater  it  would  show  a  deficit,  and 
is  also  properly  represented  where  it  is.     A  distinguished  Secre- 
tary of  the  Treasury  once  said,  it  was  easier  to  handle  a  surplus 
than  a  deficit. 

382.  That  part  of  the  surplus  or  profits  which  is  needed  to 
pay  dividends  should  be  carried  to  the  credit  side  of  a  Dividend 
account  and  the  balance  of  the  surplus,  which  was  to  be  held  in 
reserve  for  emergencies  such  as  making  extensions  to  the  prem- 
ises, repairing,  etc.,  should  be  carried  to  the  credit  side  of  a  Sink- 
ing Fund  account  (or  in  this  case  Surplus  account  would  be  just 
as  appropriate)    which    would    require   the    following    Journal 

Entry  : 

Profit  and  Loss  Dr.  To  Sundries  : 
"  Dividend, 
"  Sinking  Fund. 
To  balance  Profit  and  Loss  account. 


A    COMMON-SENSE   VIEW   OF   BOOKKEEPING. 


265 


383.  As  the  dividends  are  paid  it  would  be  entered  in   Cash 
Book  as  follows : 


1891. 


CASH.  CR. 

Disc't.    Expense.    Sund's.     Amt's. 


Oct. 

1 

By  Dividend 

On  this  side  of  the  line 
each  Stockholder's  name 
will  appear  on  a  line  by 
itself  with    the  amount 
paid     each    within    this 
space  extending  the  total 
here       .       

000 

00 

384.  It  is  not  at  all  necessary  to  carry  their  names  to  the  debit 
side  of  Dividend  account,  as  the  original  entry  will  show  their 
names.     After  all  have  been  paid  this  account  will  balance  and 
should  be  closed  by  underlining.     There  will  be  no  debit  in  the 
Sinking  Fund  account  until  part  or  all  has  been  appropriated  for 
some  purpose  for  which  it  was  provided. 

385.  If  no  dividend  should  be  decided  upon  before  another 
closing,  even  then  no  Surplus  account  is  needed  to  keep  the  profits 
of  the  previous  year  separate  from  the  profits  of  the  next  year  as 
the  Profit  and  Loss  account  will  show  at  a  glance  by  its  footing 
the   two  results  just  as  clearly  as  if  carried  to  the  superfluous 
account  whatever  it  may  be  called. 

386.  If  another  dividend  should  be  reached  before  previous 
ones  had  been  disposed  of,  we  argue  that  it  should  be  carried  to 
the  credit  of  the  Dividend  account  already  opened,  and  not  to 
another  designated    as  Dividend  No.  2,  unless  the  management 
requires  it.     We  can  conceive  of  no  possible  advantage  in  having 
more   than   one  account  to  represent  a  fund  set  apart  for  one 
special  purpose. 

We  once  succeeded  a  man  in  a  position  who  was  keeping  the 
books  of  two  firms  at  his  desk,  and  we  were  amused  to  see  that  he 
also  kept  two  Cash  drawers,  one  for  each  firm.  When  he  could 
not  make  change  from  one  he  would  borrow  from  the  other  and 
often  forget  to  pay  it  back.  The  result  was  he  never  could  keep 
either  straight.  When  he  turned  the  keys  and  money  over 
to  us  he  was  horrified  to  see  us  dump  the  contents  of  one  drawer 


260  BOOKKEEPING   SIMPLIFIED. 

into  the  other,  and  he  declared  that  we  would  never  be  able  to 
keep  our  Cash  straight.  We  never  experienced  any  trouble, 
however,  in  proving  our  Cash.  Keeping  two  or  three  Dividend 
accounts  seems  to  us  to  be  about  as  sensible  as  keeping  two  Cash 
Drawers.  In  case  of  Preferred  Stock  and  Common  Stock  one 
Dividend  account  for  each  is  necessary. 

387.  If  the  Sinking  fund  should  become  greater  than  there 
was  necessity  for,  it  would  revert  to  Profit  and  Loss,  or  more 
directly  to  Dividend  account,  whence  it  would  be  distributed 
among  the  Stockholders  through  another  declaration  of  profits, 
in  which  case  the  following  Journal  Entry  would  be  proper : 

Sinking  Fund  Dr. 

To  Dividend. 


WATERED  STOCK. 

388.  Water,  in  one  sense  of  the  word,  means  to  overflow  ; 
hence  the  phrase  Watered  Stock  to  represent  the  excess  of  Stock 
over  authorized  Capital — to  issue  which  is  a  breach  of  the  law 
that  gave  the  Company  being  but  in  perfect  harmony  with  Nat- 
ure's first  law — self-preservation,  or,  in  this  case,  self-interest. 
The  object  of  watering  stock  is  to  increase  the  divisor  and  dimin- 
ish the  rate  (see  paragraph  379),  to  prevent  showing  enormous 
profits,  and  thus  keep  within  the  limit  prescribed  by  law  without 
forfeiting  to  the  State  any  part  of  the  profit. 


PREFERRED  STOCK  AND  COMMON  STOCK. 

389.  A  business  that  had  been  very  prosperous  and  promised 
continual  large  profits  would  incorporate  with  a  very  large  Capi- 
tal Stock  and  thus  keep  within  the  prescribed  limit,  whatever  it 
may  be  in  the  State,  under  the  laws  of  which  the  Company  is 
formed. 

In  disposing  of  the  Stock  in  this  case  the  incorporators  can 
safely  hold  out  the  inducement  of  a  guaranteed  percentage  on— 
say  half  of  their  Stock,  which  would  be  entitled  Preferred  Stock 
and  the  other  half  would  be  denominated  Common  Stock.  In 


A   COMMON-SENSE  VIEW   OF  BOOKKEEPING.  267 

declaring  dividends,  therefore,  the  former  must  be  provided  for 
first  by  setting  apart  enough  of  the  profits  to  cover  the  prefer- 
ential percentage,  after  which  the  surplus  profits  would  go  toward 
a  dividend  on  the  Common  Stock.  In  the  event  that  the  profits 
of  any  year  do  not  even  cover  the  guaranteed  percentage  on  Pre- 
ferred Stock  the  shortage  would  stand  charged  against  the  net 
earnings  of  the  Company  prior  to  all  rights  of  the  Common 
Stock  ;  that  is,  it  must  be  made  good  out  of  the  succeeding  year's 
profit  over  and  above  the  guaranteed  percentage  of  that  year, 
before  the  Common  Stock  dividend  can  be  declared.  The  Pre- 
ferred Stock  is  also  entitled  to  rank  against  the  property  and 
assets  of  the  Company  in  preference  to  the  Common  Stock. 
Those  who  purchase  Common  Stock  understand  the  conditions 
and  are  at  a  disadvantage  in  case  the  business  does  not  prosper, 
but  it  is  a  good  risk  which  they  think  worth  taking  as  the  chances 
are  that  money  thus  invested  will  bring  a  larger  rate  of  interest 
than  other  investments  attended  by  greater  risk. 

390.  In  fact  it  is  often  the  case  that  the  Common  Stock 
pays  the  best  percentage — that  is,  when  the  net  earnings  are  so 
large  that  the  surplus,  after  providing  for  the  Preferred  Stock, 
is  sufficient  to  afford  a  larger  dividend  on  the  Common  Stock. 
For  example,  we  assume  that  the  net  gain  of  the  Company  will 
justify  a  20$  dividend  on  the  total  Capital  Stock  arid  that  8$  of 
it  is  required  to  satisfy  the  Preferential  dividend ;  the  remaining 
12$  goes  to  the  Common  Stock.  In  opening  books  where  there 
are  two  kinds  of  stock  two  Stock  Certificates  accounts  would  be 
necessary,  one  for  each  kind,  also  two  Dividend  accounts. 


STOCK  BOOK. 

391.  This  book  is  made  on  the  plan  of  a  Check  Book,  usually 
three  or  six  certificates  to  a  leaf,  with  a  detachable  part  called 
Stub.  The  language  in  the  certificate  will  vary  with  different 
companies,  but  the  stub  should  always  show  No.  of  Certificate, 
Date  issued,  No.  of  Shares,  To  whom  issued.  Address,  there  be- 
ing one  line  fo\  each.  It  is  not  at  all  necessary  to  have  in  the 
printed  form  a  line  for  transfer  number,  or  date  of  transfer,  as 


268  BOOKKEEPING   SIMPLIFIED. 

it  is  better  to  endorse  these  facts  crosswise  of  the  stub  in  red  ink 
if  the  certificate  should  be  returned  for  cancellation  preparatory 
to  issuing  new  certificates  in  case  of  transfer.  The  old  certifi- 
cates should  be  marked  cancelled  in  red  ink  and  filed  away  same 
as  cancelled  checks — it  would  certainly  make  a  dilapidated  look- 
ing book  to  paste  them  on  the  old  stub  as  some  do.  Ordinary 
blank  books  will  do  for  other  auxiliaries. 


IMPORTING  BUSINESS. 

392.  In  this  business  we  buy  our  goods  in  another  country  ; 
hence  they  are  billed  to  us  according  to  the  monetary  system 
prevailing  in  the  country  whence  they  were  imported.     That  is, 
goods  bought  in  England  are  invoiced  in  £.  s.  d.     Invoices  from 
Germany  are  rendered  in  marks,  and  from  France  they  come  in 
francs  and  centimes.     Upon  receipt  of  the  foreign  invoices  we 
reduce  them  to  their  equivalents  in  our  money,  adopting  a  uni- 
form rate  as  an  approximate  value  because  of  the  impracticability 
of  getting  the  exact  rate  at  which  we  will  buy  exchange  when  re- 
mitting, owing  to  the  constant  fluctuation  in  the  price  of  foreign 
exchange,  as  it  is  called. 

393.  For  example  we  assume  that  we  get  an  invoice  from  E. 
L.  Nelson,  London,  for  £125  9s.  6d.,  which  is  equivalent    to 
$610.97  at  our  uniform  rate  ($4.87) ;  but  when  we  go  to  foreign 
exchange  brokers  to  buy  £125  9s.  6d.  for  remitting  to  E.  L. 
Nelson,  it  costs  us  $612.27,  as  we  must  abide  by   their  rates; 
thus  it  will  be  seen  that  the  account  of  E.  L.  Nelson  in  foreign 
money  will  balance,  but  in  our  money  there  is  a  difference  of 
$1.30  in  favor  of  the  debit  side.     Differences  of  this  kind  should 
be  adjusted  monthly,  at  least  when  the  foreign  money  balances 
the  account  should  be  made  to  balance  throughout  by  the  follow- 
ing journal  entry : 

Mdse.  Dr  1.30 

To  E.  L.  Nelson,  1.30 

394.  In  an  importing  business,  therefore,  our  Ledger  should 
be  specially  ruled  with  one  more  spaces  on  each  side  next  to  the 


A   COMMON-SENSE   VIEW    OP   BOOKKEEPING.  269 

amount  columns  for  the  foreign  figures.  The  space  need  not  be 
in  columns ;  in  fact,  the  usual  space  for  descriptive  matter-eatt- 
be  utilized,  making  an  ordinary  Ledger  answer  the  purpose, 
as  follows : 


Dr.                                           E.  L.  NELSON,                                            Or. 

1891                                  £.s.d.                               1891                                      £.s.d. 

Sept. 

L 

To  Cash...  125.  9.  6 

3 

612 

2! 

Aug. 

1. 

By  Mdse...  125.9.6 

610 

395.  This  kind  of   business  gives  rise  to  a  Duties  account 
which  is  tributary  to  the  Mdse.,  as  the  duties  are  a  part  of  the 
cost  of  the  goods.     Hence,  at  the  end  of  the  season  the  Duties 
account  must  be  closed  into  the  Mdse.  either  by  a  transfer  in  red 
ink  or  by  making  the  following  journal  entry : 

Mdse.  Dr. 

To  Duties. 

The  figuring  of  duties  is  not  entrusted  to  the  bookkeeper  as 
a  rule,  owing  to  the  complicated  rates  which  vary  according  to 
the  different  kinds  of  dutiable  goods.  The  proprietor  usually 
looks  after  the  duties,  or  it  is  attended  to  by  Custom  House 
brokers  who  make  it  their  business. 

396.  All  goods  sent  to  or  received  from  European  countries 
must  be  accompanied  by  a  duplicate  invoice  which  is  retained  by 
the  Custom  authorities  at  the  port  of  delivery.     If  we  receive  an 
invoice  without  duplicate,  it  becomes  necessary  to  make  a  copy 
of  it  before  we  can  get  the  goods  out  of  the  Custom  House. 


OUR  REWARD. 

397.  We  have  consecrated  many  years  to  the  cause  of  book- 
keeping, and  although  our  bank  account  is  very  unsatisfactory 
our  reward  will  be  ample  if  through  the  instrumentality  of  our 
book  we  may  be  permitted  to  lighten  the  burden  of  the  over- 
worked and  underpaid  man  at  the  desk  with  whom  it  is  often  the 
case  of  a  heavy  load  and  a  sorry  team. 


270  BOOKKEEPING   SIMPLIFIED. 


A  BOOKKEEPER'S  PREROGATIVES. 

A  bookkeeper  likes  a  hearty  slap  on  the  shoulder  unawares, 
especially  when  engaged  with  pen  and  ruler  over  the  Ledger. 

His  functions  being  altogether  more  ornamental  than  useful, 
he  will  feel  offended  if  you  confine  yourself  to  business;  his 
favorite  topixj  naturally  remains  the  weather,  but  he  also  keenly 
relishes  politics,  your  own  inventions,  the  cunningness  of  your 
dogs  and  children,  and  the  general  business  of  mankind.  Do 
not  omit  the  slightest  details  in  your  narration;  he  is  eminently 
fond  of  them. 

You  will  always  be  surest  of  his  attention  when  he  is  mak- 
ing out  a  long  statement  for  somebody,  by  drumming  with  hands 
and  feet  to  retard  his  last  train.  When  you  catch  him  footing 
up  a  heavy  column,  just  give  him  a  chance  for  rest  by  confi- 
dentially whispering  a  nice  string  of  assorted  anecdotes  into  his 
ear,  the  older  and  longer  the  better,  and  he  will  never  forget 
you !  To  fire  his  imagination  let  him  smell  your  breath  and 
other  exhalations,  by  leaning  well  over  him;  he  doesn't  feel  so 
lonely  then,  poor  fellow! 

Don^t  neglect  to  deposit  your  cigar  stumps,  ashes,  and  dis- 
missed quids  on  and  around  his  inkstand ;  it  will  surround  him 
with  an  atmosphere  of  sociability,  which  makes  him  very  proud. 

A  bookkeeper  being  a  gentleman,  you  should  never  be 
ashamed  to  ask  him  for  the  loan  of  his  umbrella,  rubbers,  pencil, 
or  money,  though  he  dislikes  being  troubled  for  less  than  two 
dollars  at  a  time,  and  prefers  round  sums.  Put  the  pencil  into 
your  mouth  before  using  it,  to  assure  the  owner  that  you  con- 
sider him  your  equal. 

Leave  packages  with  him,  to  be  called  for  in  a  fortnight  or 
to  be  sent  somewhere  with  a  verbal  message,  and  he  will  feel 
flattered  by  your  confidence;  never  mind  making  the  address 
distinct  or  the  message  precise ;  he  will  fix  it  all  right  for  you, 
having  absolutely  nothing  else  to  attend  to. 

A  bookkeeper  is  an  enthusiastic  buyer  of  tickets  for  fairs, 


A   COMMON-SENSE   VIEW   OF  BOOKKEEPING.  271 

picnics,  balls,  and  private  moonlight  and  fishing  excursions; 
you  will  tickle  his  commercial  vanity  by  offering  them-a4-a 
reduced  figure  by  the  dozen,  confidentially. 

If  you  have  occasion  to  receipt  a  bill  or  do  other  writing  at 
his  desk,  be  sure  to  use  his  red-ink  pen,  as  it  always  looks 
cleaner  and  fresher,  and  it  affords  him  an  agreeable  surprise 
when  he  again  uses  the  red  ink  to  find  it  has  been  steeped  in 
black. 

No  difference  what  your  calling  in  life  has  been,  if  you  are 
without  means,  although  looking  mean  enough  for  anything  and 
your  looks  do  not  belie  you,  approach  him  and  say:  "  I  am  an 
old  bookkeeper  in  hard  luck!"  He  will  take  warning  by  your 
awful  fate,  and  you  can  take  time  by  the  forelock  and  seek  safety 
in  flight  before  your  departure  is  unduly  accelerated  by  a  sud- 
den precipitation  through  the  window. 


METHOD. 

It  is  method  that  provides  a  place  for  everything  and  puts 
everything  in  its  place;  it  has  a  way  of  doing  everything  and 
does  everything  the  right  way;  it  is  a  safeguard  against  disaster 
and  is  very  essential  in  bookkeeping.  For  instance,  it  matters 
not  which  side  of  an  account  is  considered  first,  as  both  sides 
must  be  added  to  get  the  difference  or  net  result,  which  is  the 
objective  point;  but  a  methodical  person  would  add  the  debit 
side  of  certain  accounts  first  and  the  credit  side  of  certain  other 
accounts,  depending  altogether  upon  the  nature  of  the  inquiry  or 
information  sought.  If  it  is  desired  to  know  how  much  one 
owes  us,  we  would  figure  the  debit  side  of  his  account  first,  be- 
cause that  side  furnishes  the  information;  on  the  other  hand,  if 
it  is  a  question  as  to  how  much  we  owe  another,  the  credit  side 
would  be  considered  first  for  the  same  reason.  If  the  inquiry 
is  as  to  how  much  we  have  gained,  the  credit  side  of  the  account, 
representing  gain  or  loss,  would  be  reckoned  first,  thereby  going 


272  BOOKKEEPING   SIMPLIFIED. 

directly  to  the  point  in  question ;  the  reverse  would  be  true  if 
it  was  a  question  of  loss. 

In  proving  the  cash  or  posting  from  the  Cash  Book  method 
would  impel  us  to  consider  the  debit  side  first,  as  cash  must  be 
received  before  it  can  be  paid  out,  and  we  are  prone  to  begin  at 
the  beginning  and  would  be  extremely  averse  to  crawfishing,  that 
is,  going  backward.  The  debit  side  of  Bills  Eeceivable  would 
be  added  first  and  the  credit  side  of  Bills  Payable  for  the  same 
reason,  that  is,  begin  at  the  beginning.  In  summing  up  the  gains 
and  losses  for  the  year  we  would,  turn  our  attention  to  the  credit 
side  of  the  Profit  and  Loss  account  first,  it  being  more  agreeable  to 
contemplate  our  gain  than  it  would  be  to  know  our  loss.  Defer 
the  evil  as  long  as  possible.  In  recapitulating  the  resources  and 
liabilities  we  would  irresistibly  begin  with  the  former,  because 
it  is  an  inherent  principle  in  the  nature  of  the  genus  homo  to 
be  more  concerned  about  our  own  than  that  which  belongs  to 
another. 


UNIFORMITY. 

All  superfluous  lines,  that  is,  lines  not  written  upon,  above 
the  closing  on  either  side  of  an  account  should  have  an  oblique 
red  line  drawn  across  them,  beginning  on  the  left  at  the  bottom 
line,  terminating  at  the  right  of  the  paper  where  the  last  line 
used  intersects  the  first  perpendicular  line.  As  a  matter  of  uni- 
formity and  good  taste  all  oblique  lines  appearing  on  one  page 
should  run  in  the  same  direction,  that  is,  have  the  same  angle 
but  not  necessarily  terminate  at  the  same  perpendicular  line; 
therefore,  after  the  first  oblique  line  occurs  it  establishes  the 
angle,  and  the  terminus  of  all  other  lines  on  that  page  will  be 
governed  by  the  depth  of  the  space  to  be  covered.  If  a  very 
deep  space  occurs  after  the  angle  has  been  formed,  it  will  be 
necessary  to  rule  more  than  one  oblique  line  across  it,  the  ter- 
minus of  the  additional  cross  lines  being  at  the  right  of  the 
space,  of  course,  at  the  same  line  where  the  first  one  above  it 


A   COMMON-SENSE   VIEW   OF  BOOKKEEPING.  273 

began  on  the  left.     See  diagram  below  representing  the  credit 
half  of  a  Ledger  page  inclined  to  the  right : 


UP-END  DOWN. 

In  performing  the  same  task  for  years,  a  person  having  a 
philosophical  mind  will  in  time  conceive  a  plan  for  doing  it 
with  the  least  physical  exertion.  Archimedes  said,  "  Give  me 
a  fulcrum  on  which  to  rest  a  lever  and  I  will  move  the  world." 

If  we  see  ponderous  books  resting  in  the  safe  with  the  north 
end  upward,  we  know  that  the  person  who  placed  them  there  was 
neither  a  philosopher  nor  an  experienced  bookkeeper;  we  know, 
moreover,  that  in  removing  them  to  the  desk  he  will  lift  them 
bodily  into  position  by  main  strength  and  awkwardness  (just 
as  the  hen  cracked  the  hickory  nut  [?]). 

Experience  has  taught  us  to  put  them  away  south  end  (that 
is,  the  end  next  to  us  when  in  use)  upward ;  then,  by  taking  them 
by  the  latter  end  with  a  swinging  motion,  we  easily  land  them 
on  the  desk  in  the  right  position  for  use. 

The  moral  is,  put  the  look  away  up-end  down. 


274  BOOKKEEPING  SIMPLIFIED. 


IMPERFECT  ARTICULATION. 

In  mammoth  establishments  there  are  many  departments,  es- 
pecially in  the  dry -goods  business,  each  of  which  is  represented 
on  the  Sales  Book  by  a  letter — A,  B,  C,  D,  E,  etc.,  and  as  the 
last  four  sound  very  much  alike  when  imperfectly  articulated 
many  errors  would  arise  in  calling;  hence  to  prevent  such  errors 
the  departments  are  called  by  their  numerical  location  in  the 
alphabet.  For  instance,  the  call  clerk  would  say  fourth  letter  in- 
stead of  "  D, "  second  letter  instead  of  "  B, "  and  so  on  with  others 
except  A. 


CONTINGENT  LIABILITY. 

Anything  said  or  done  in  the  name  of  a  firm  is  regarded  as 
an  expression  or  act  of  the  firm ;  for  that  reason  employes  are 
not  entrusted  with  correspondence  involving  delicate  or  impor- 
tant matters.  Again,  anything  said  in  our  presence  derogatory 
to  a  firm  by  which  we  are  employed,  although  it  may  be  culpa- 
ble and  indefensible,  we  would  resent  as  a  personal  affront  or 
insult. 

Fidelity  is  the  noblest  trait  of  human  beings. 

Signing  the  firm  name  by  an  employe  would  be  impotent  in 
effect,  in  other  words,  not  binding  on  the  firm,  if  it  is  repudiated, 
unless  he  is  empowered  with  attorneyship.  If,  however,  any 
member  of  a  firm  subscribes  or  endorses  the  firm  name  to  or  on 
an  obligation  it  is  binding  alike  on  each  and  all  the  members 
thereof,  and  for  that  reason  a  stipulation  is  usually  made  in  the 
copartnership  agreement  that  neither  partner  will  sign  or  endorse 
in  the  name  of  the  firm  without  the  consent  of  all  its  members. 
Endorsements  of  this  kind  would  constitute  a  contingent  liability 
having  no  representation  on  the  books;  hence  the  firm  could  be 
deeply  involved  in  debt,  or,  in  fact,  be  totally  insolvent  and  yet 
seem  to  be  rich  because  opulent  in  resources.  There  is  an  un- 


A   COMMON-SENSE   VIEW   OF  BOOKKEEPING.  275 

avoidable  contingent  liability,  however,  that  should  not  be -lost 
sight  of,  although  without  special  representation  on  the  hooks — that 
is,  endorsed  notes  which  have  been  discounted  or  otherwise  negoti- 
ated. In  the  ordinary  course  of  business,  liabilities  of  this  kind 
are  small  and  can  easily  be  ascertained  by  reference  to  the  Bills 
[Receivable  book.  If,  however,  the  nature  of  the  business 
should  depart  from  the  ordinary  by  the  discounting  of  many 
notes  having  long  time  to  run,  whereby  the  amount  under  dis- 
count would  necessarily  grow  into  a  prodigious  sum,  there  should 
be  a  Ledger  account  to  represent  it.  Such  an  account  could  ap- 
propriately be  called  ENDORSEMENTS  or  CONTINGENCIES.  When 
notes  are  discounted  or  otherwise  disposed  of,  instead  of  crediting 
Bills  Receivable  it  would  be  better  to  credit  Contingencies  (or 
Endorsements)  account,  and  as  fast  as  the  notes  become  due  and 
it  was  assured  that  they  had  been  paid,  charge  Contingencies  and 
credit  Bills  Receivable  through  the  Journal  as  follows : 

CONTINGENCIES,  Dr. 

To  BILLS  RECEIVABLE 
Explaining  here  what  notes  are  paid. 

The  credit  side  of  the  latter  account  in  that  case  would  show 
notes  actually  paid,  the  debit  side  would  show  amount  not  paid, 
but  not  necessarily  on  hand,  as  they  may  have  been  negotiated. 
The  credit  side  of  the  Contingencies  account  would  be  the  greater 
if  there  is  a  difference  and  would  represent  a  contingent  liability. 

The  large  financial  institutions  of  the  eastern  continent,  also 
of  this  country,  look  upon  this  as  an  important  matter,  as  evinced 
by  the  fact  that  it  is  given  prominence  in  their  annual  state- 
ments. 

It  dawned  upon  our  mind  early  in  our  experience  that  this 
was  important,  but  evidently  it  had  never  occurred  toothers  with 
whom  we  had  come  in  business  contact  either  as  our  employer 
or  fellow  bookkeeper.  It  was  never  agitated  by  us,  as  our  field 
of  operation  at  that  time  was  limited  and  liability  of  that  kind 
was  small.  As  a  youth  we  did  not  have  the  courage  of  our 
conviction  to  herald  a  new  theory  which  probably  would  not 


376  BOOKKEEPING   SIMPLIFIED. 

meet  with   favor;   furthermore,  we  knew   that  "No  man   is  a 
prophet  at  home."  * 

Liability  of  this  kind  has  never  been  alluded  to  by  any  other 
writer  on  the  subject  of  bookkeeping.  In  treating  of  it  here 
we  bring  it  to  the  light  for  the  first  time,  a  fact  in  perfect  accord 
with  the  entire  contents  of  our  book,  which  is  the  result  of  the 
writer's  own  experience  of  a  quarter  of  a  century  in  the  midst 
of  the  smartest  figuring  heads  of  the  commercial  world,  and  not 
the  result  of  interviews  with  a  few  old  fogies,  whose  opinions 
have  no  weight  because  they  are  not  backed  up  by  judgment 
or  reason.  One  must  be  able  to  give  a  reason  for  the  hope  that 
is  within  him  if  he  would  gain  credence. 


ERASURES. 

A  rule  of  the  old  school  is,  never  make  erasures  ;  with  us  that 
rule  is  the  exception,  that  is  to  say,  we  always  make  erasures 
when  the  occasion  requires  them.  It  is  true  that  an  erasure  is 
an  evidence  of  fraud  in  the  eyes  of  the  law,  hence  a  record  in 
which  there  is  an  erasure  would  not  be  accepted  as  evidence  in 
a  court  of  justice.  If  the  old  school  makes  erroneous  figures 
it  draws  a  pen  through  them  and  makes  correct  ones  above;  if 
it  has  blots  on  its  books  they  are  permitted  to  remain.  We  do 
not  keep  books  in  anticipation  of  a  law-suit,  hence  we  do  not 
see  the  necessity  of  permitting  our  books  to  remain  defaced  in 
order  to  be  prepared  for  that  which  may  never  take  place. 
Furthermore,  we  believe  in  taking  the  bull  by  the  horns, — in 

*  Digressing  from  the  main  subject,  we  may  add  that  this  is  a  true  say- 
ing and  goes  to  show  that  merit  is  not  everywhere  rewarded.  For  exam- 
ple :  John  Howard  Payne  was  of  little  consequence  where  he  was  known, 
because  he  was  homeless  and  friendless,  hut  he  was  famous  abroad.  He 
knew  nothing  about  home,  sweet  home,  from  experience,  but  by  the 
promptings  of  the  inner  man,  and  it  inspired  him  to  write  the  most  popu- 
lar song  that  was  ever  written,  and  which  is  still  sung  throughout  the 
civilized  world — a  requiem  chanted  in  every  tongue. 


A   COMMON-SENSE   VIEW   OF   BOOKKEEPING.  277 

other  words,  meeting  the  issue  squarely.  Consequently,  if  we 
make  erroneous  figures  we  erase  them  and  substitute  correct 
ones  in  lieu  thereof.  If  by  accident  or  otherwise  our  books  be- 
come blotted,  our  remedy  for  such  an  eyesore  is  erasing.  The 
necessity  for  erasures  is  of  daily  occurrence,  whereas  the  neces- 
sity for  a  legal  tilt  may  never  occur.  It  is  sheer  nonsense  to  sub- 
ordinate the  pressing  importance  of  issues  already  upon  us  to  im- 
probable, but  possible,  emergencies,  probably  far  remote.  We  would 
dislike  to  make  erasures  on  the  cash  book,  as  it  might  arouse 
suspicion  in  the  minds  of  our  employer  that  we  were  tampering 
dishonestly  with  his  money.  One  cannot  be  too  careful  in 
handling  money  belonging  to  another;  although  perfectly  honest, 
circumstantial  evidence  may  condemn  him  to  a  felon's  cell. 

There  are  two  instances  in  which  we  would  not  make  era- 
sures— one  is  in  the  Trial  Balance  and  the  other  is  in  the  Balance 
Sheet.  The  latter  should  be  rendered  without  a  blemish  or  im- 
perfection, and  if  an  error  or  blot  occurs  during  its  prepara- 
tion, even  near  its  completion,  we  would  destroy  it  and  begin 
anew. 

Every  good  business  man  expects  a  Trial  Balance  between 
the  1st  and  10th  of  each  month,  and  when  it  is  not  forthcoming 
he  inquires  for  the  cause  of  delay,  and  if  informed  that  it  is  due 
to  error  he  then  becomes  anxious  as  to  the  nature  and  extent  of 
such  error  or  errors.  Hence  we  would  not  erase  the  erroneous 
figures  in  a  Trial  Balance,  but  cancel  them  by  a  red  line,  and 
place  the  correct  figures  over  them  or  wherever  they  belonged, 
thus  showing  wherein  the  error  consisted  and  that  it  was  hon- 
estly corrected,  and  that  the  Trial  Balance  ivas  not  forced.  The 
comments  relative  to  erasures  have  reference  to  work  done  by 
ourselves  and  do  not  apply  to  work  performed  by  others.  If 
we  were  to  assume  charge  of  books  that  had  been  kept  by  others 
and  should  find  errors  in  them,  we  would  not  erase  but  cancel 
by  a  red  line,  so  as  not  to  destroy  their  identity  or  discernible - 
ness,  and  place  the  correct  figures  or  words  over  them. 

We  do  not  recommend  erasing,  however,  as  a  fine  art  in  the 
face  of  the  following  good  story,  viz.  : 


278  BOOKKEEPING   SIMPLIFIED. 

Three  clerks  applied  for  a  position  as  bookkeeper  and  were 
examined  on  erasing  only,  when  the  following  colloquy  ensued: 

Old  man  to  first  applicant:  "How  are  you  on  erasures?" 
First  applicant:  "  I  can  make  a  passable  erasure,  sir,  but  it  may 
not  be  satisfactory  to  a  connoisseur." 

Old  man  to  second  applicant:  ''Young  man,  how  are  you  on 
erasures?"  Second  applicant :  "  I  am  out  of  sight  (his  way  of  ex- 
pressing a  superlative  degree  of  expertness) ;  that  is,  I  can  make 
an  erasure  so  that  it  would  require  a  microscopical  observation 
to  discover  it."  Old  man,  somewhat  impressed  by  this  forcible 
slang,  could  not  resist  the  overpowering  impulse  for  getting  in 
his  slang  too,  and  said  in  the  language  of  the  club:  "  Your  skill 
ought  to  make  you  a  cinch  or  an  air  tight,  and  you  ought  to  get 
all  the  money  if  the  game  last  long  enough,  but  for  you  the  game 
is  now  closed.  You  may  cash  in  and  retire. " 

Old  man  to  third  applicant:  "Well,  sir,  how  are  you  on 
erasures?"  Third  applicant:  "  I  never  make  erasures.  I  have 
the  reputation  of  being  very  correct,  hence  have  had  no  expe- 
rience in  that  respect."  Old  man:  "You  are  the  man  I  am 
looking  for.  Consider  yourself  engaged. " 


A  MISUSED  ABBREVIATION. 

The  letter  "  a"  encircled  thus,  @,  represents  the  four  words, 
at  the  rate  of,  and  is  the  brief  way  of  writing  them.  The 
monosyllable  "  at"  has  another  significance  and  is  as  brief  in 
itself  as  the  commercial  or  encircled  @,  but  is  in  nowise  synony- 
mous with  it,  although  by  the  great  majority  even  of  experi- 
enced people  the  abbreviation  "  @"  is  used  incorrectly  for  "  at. " 
The  very  fact  that  the  former  is  not  briefer  than  the  latter  proves 
that  we  are  right  in  the  premise.  A  short  word  should  never 
be  abbreviated,  in  fact  no  word,  if  space  will  admit  of  its  being 
written  in  full.  There  are  many  words  in  brevier  abbreviated 
throughout  our  eighteen  lessons,  but  that  is  done  to  show  the 


A  COMMON-SENSE   VIEW   OF  BOOKKEEPING.  279 

necessary  abbreviations  to  resort  to  in  writing  so  as  to  get  them 
within  the  limited  space. 


THREE   DAYS   OF   GRACE. 

The  long-established  and  time-honored  custom  of  allowing 
notes  and  acceptances  three  days  longer  to  run  than  the  specified 
time  has  recently  been  abolished  in  the  States  of  New  York  and 
New  Jersey. 

It  was  deemed  no  longer  wise  or  necessary  to  continue  it  in 
the  present  age  of  rapid  transit,  as  the  great  facilities  for  com- 
municating with  distant  points  now  more  than  counterbalance 
the  advantage  gained  by  the  three  days  of  grace  at  the  time  they 
became  a  law. 


ANOTHER   SO-CALLED  "SYSTEM."    • 

We  refer  to  a  new  way  of  conducting  accounts.  It  impresses 
only  inexperienced  bookkeepers  and  novices  in  such  matters,  but 
we  can  see  nothing  in  it  to  even  suggest  or  justify  such  an 
appellation.  It  leads  us  to  infer  that  we  may  feel  secure  from 
some  unspeakable  danger  and  that  no  harm  can  befall  us  while 
we  have  such  protection. 

Safeguard  method  of  the  double-entry  system  would  be  a 
better  way  to  put  it,  as  it  is  not  a  system  in  itself  but  a  peculiar 
method  of  double  entry.  Instead  of  the  names  of  accounts  ap- 
pearing at  the  top  of  the  page  in  the  usual  way,  they  appear  on 
the  left  of  it. 

A  number  of  lines,  say  ten,  are  assigned  to  each  account. 
The  first  one  begins  on  first  line  and  runs  to  the  tenth,  the  sec- 
ond begins  on  the  eleventh  line  and  runs  to  the  twentieth,  and  so 
on  throughout  the  page.  The  lines  are  numbered.  If  more  en- 
tries are  necessary  during  the  month  than  there  are  lines,  they 
are  sandwiched  in  between  the  entries  already  made,  which  to 
say  the  least,  makes  a  botch  of  it,  and  for  that  reason  it  is  de- 
cidedly objectionable. 


280  BOOKKEEPING   SIMPLIFIED. 

Instead  of  ooe  set  of  columns  for  dates,  folios,  and  amounts, 
and  two  spaces  for  entries  on  each  page,  there  are  twelve  such 
sets  to  a  page,  one  for  each  month,  each  of  which  is  headed  by 
its  respective  month  from  January  to  December.  There  is  an 
extra  column  on  the  right  of  each  set  for  balances,  but  no  space 
for  entries.  The  columns  are  all  added  at  the  bottom  of  each 
page,  and  the  footing  of  the  balance  column  must  be  equal  to 
the  difference  between  the  footings  of  the  two  amount  columns, 
thus  proving  the  page.  The  same  thing  could  be  done  with  the 
ordinary  Ledger,  but  we  fail  to  see  a  single  advantage  in  such  a 
proof.  In  making  the  Trial  Balance,  therefore,  page  results  are 
taken  by  this  method,  which  does  not  accomplish  a  secondary 
object  of  the  Trial  Balance,  that  is,  to  show  at  a  glance  the  stand- 
ing of  each  account,  which  is  important  and  for  which  the  pro- 
prietor desires  it  more  than  for  any  other  purpose.  Instead  of 
being  simple,  as  all  books  of  accounts  should  be,  it  is  rather  com- 
plex, so  much  so  that  bookkeepers  in  general  cannot  understand  it 
at  first  sight.  Its  advocates  claim  that  it  diminishes  the  work  and 
saves  time,  when,  on  the  contrary,  it  increases  the  work  if  any- 
thing, and  requires  more  time  than  with  the  usual  form  of  a  Led- 
ger. It  saves  at  the  spigot  and  wastes  at  the  bung.  It  may 
have  some  redeeming  features  which  we  have  failed  to  discover, 
but  it  has  others  already  alluded  to  which  condemn  it,  and  be- 
tween the  two,  pro  and  cow,  it  is  more  than  a  stand-off  in  favor 
of  the  latter.  We  never  give  praise  where  there  is  no  merit. 
"With  all  due  respect  for  the  originator  and  promoter  and  his 
followers,  we  must  confess  that  we  would  not  use  it  nor  would 
we  permit  it  to  be  used  in  any  business  over  which  we  had 
control. 


BOOKKEEPING   SIMPLIFIED.  281 

PARADOX. 

Finding  a  remainder  by  addition  seems  to  be  a  perversioa  of 
arithmetical  terms  and  a  revolution  of  mathematical  principles,  as 
a  remainder  is  usually  found  by  subtraction  and  the  result  of  ad- 
dition is  termed  total.  Below,  however,  we  give  the  result  of  an 
addition  which  is  a  remainder. 

It  will  be  noticed  that  there  are  three  rows  of  figures  in  the 
minuend,  but  it  matters  not  whether  there  are  one  or  many,  although 
but  one  row  is  allowable  in  the  subtrahend,  whereas  in  the 
usual  method  of  subtraction  but  two  rows  of  figures  are  permissible, 
which  are  arranged  with  the  smaller  under  the  greater,  units  under 
units,  and  tens  under  tens,  etc. 

7,102     Subtrahend. 
4,253 

396  \-  Minuend. 
1,140 


1,313     Eemainder. 
DEMONSTRATION. 

Remainder. 

0  +  6  +  3=    9  +  3  =  12 

1  +  4  +  9  +  5  =  19  +  1  =  20 

2  +  1  +  3  +  2=    8  +  3  =  11 
1+1+0+4=    6+1=    7 

EXPLANATION. 

Add  the  units  column  of  the  minuend,  the  result  is  9,  lacking  3 
of  making  first  figure  in  units  place  of  subtrahend,  with  10  over  or 
1  to  carry  to  the  tens  column  in  minuend,  making  19  which  lacks 
1  of  making  second  figure  in.  subtrahend  with  20  over  or  2  to  carry 
to  the  hundreds  column  in  minuend,  making  8  and  lacking  3  of 
producing  third  figure  in  subtrahend  with  10  over  or  1  to  carry  to 
the  thousands  column  in  minuend  which,  when  added,  makes  6  and 
lacks  1  of  equalling  last  figure  in  the  subtrahend.  The  lacking 
figures  are  those  found  in  the  remainder,  see  demonstration. 

This  is  the  surest  way  of  getting  a  correct  remainder  and  is  the 
method  pursued  by  experienced  cashiers  in  making  change. 

For  instance,  if  we  are  handed  a  piece  of  money  from  which  to 
take  what  is  coming  to  us,  we  begin  with  the  amount  we  are  to  re- 
ceive and  add  to  it  enough  to  equal  the  piece  handed  to  us,  thereby 
assuring  ourselves  of  getting  our  part. 


282  A   COMMON-SENSE   VIEW   OF   BOOKKEEPING. 

THE  BEST   WAY  TO   SUBTRACT. 

There  are  two  ways  of  subtracting.  One  way  is  when  it  is  neces- 
sary to  add  10  to  any  place  in  the  subtrahend,  deduct  1  from  the 
next  higher  place,  that  is  the  next  place  on  the  left.  This  way  is  ob- 
jectionable because  as  we  have  seen  in  our  experience  that  it  was 
most  difficult  for  the  majority  to  get  a  correct  remainder  owing 
to  the  fact  that  they  become  entangled  when  the  cipher  occurs. 
Another  and  better  way  is  when  it  is  necessary  to  add  10  to  any 
place  in  the  subtrahend,  add  1  to  the  next  higher  place  in  the  minuend, 
as  10  in  any  place  is  equal  to  1  in  the  next  place  on  the  left,  that  is 
ten  units  equal  one  ten,  and  ten  tens  equal  one  hundred,  and  so  on 
to  infinity.  It  is  a  well  understood  mathematical  principle  that  if 
any  two  numbers  be  equally  increased  their  difference,  will  be  equal. 


THEORY   MUST    PRECEDE    PRACTICE. 

Compilers  or  soi-disant  authors  who  assume  to  be  en  rapporte  or 
all- wise  in  matters  appertaining  to  accounts  and  whose  "articles," 
as  they  call  their  jumble  of  words,  are  more  remarkable  for  puerility 
than  for  astuteness,  say  that  "  Dr.,"  "  Or.,"  "  To,"  and  "  By,"  should 
be  omitted  because  they  are  understood.  These  fledgelings  in  mat- 
ters of  accounts  or  would-be  oracles  on  the  subject  of  bookkeeping 
are  evidently  just  from  the  shell,  or  still  in  the  crude  state  and  not 
informed  as  to  the  polished  methods  of  scientific  accounting.  To 
follow  their  advice,  to  say  the  least,  would  be  to  court  dismissal  for 
incompetence.  They  furnish  us  with  the  laughable  exhibition  of 
vaulting  egotists  overleaping  themselves.  One  should  mount  not 
too  high  in  self-esteem  lest  the  fall  be  greater  in  the  estimation  of 
others.  Birds  that  soar  the  highest  fall  the  heaviest.  We  admit 
that  such  signs  as  "  Dr.,"  "  Cr.,"  etc.,  are  presumably  understood  by 
some,  but  to  state  them  in  writing  leaves  no  room  for  doubt  in  the 
mind  of  any,  it  makes  assurance  doubly  sure;  furthermore  "Dr. 
To"  must  appear  on  the  left  of  a  ledger  account  and  "  Cr.  By"  on 
the  right  of  it  as  important  links  to  complete  the  chain  of  thought 
connecting  the  account  with  the  words  that  follow  it  on  either  side. 
If  this  chain  of  thought  is  interrupted  or  disconnected  by  the  omis- 
sion of  the  important  links,  the  work  becomes  mechanical,  as  it 


A   COMMON-SENSE  VIEW   OF  BOOKKEEPING.  283 

were,  and  not  being  governed  by  reason  is  just  as  likely  to  be  done 
wrong  as  right,  a  fact  we  have  seen  demonstrated  repeatedly  in_pur 
experience  as  instructor. 

Common  sense  teaches  us  that  theory  must  precede  practice, 
at  least  in  this  field  of  industry,  notwithstanding  the  fact  that 
Herbert  Spencer,  the  English  philosopher,  says  that  practice 
must  precede  theory.  To  our  mind  it  is  clear  that  we  must 
come  to  a  theoretical  conclusion  as  to  what  we  are  going  to  do; 
then  put  it  into  practical  execution  by  doing  it  accordingly,  not 
do  anything  by  chance  or  accident  and  then  undertake  to  theo- 
rize as  to  why  it  was  thus  done,  "  don't  you  know?" 

Our  book  is  the  pioneer  exponent  of  expert  accounting  and 
modern  business  methods  of  bookkeeping  in  general,  other 
recent  publications  being  very  poor  imitations  of  it.  It  has 
been  the  source  of  much  information  found  in  the  compilations 
of  others,  who  make  constant  allusion  to  themselves  ad  nauseam 
to  all  as  "  The  Author,"  when  in  fact  they  are  not  authors  at  all, 
nor  do  they  rise  to  the  dignity  of  ordinary  compilers,  their  (?) 
ideas  having  been  transplanted  from  native  soil  to  one  entirely 
barren  and  non-productive  of  original  ideas. 


SALES   SHEETS. 

Many  concerns  have  abandoned  the  use  of  the  Sales  Books, 
giving  preference  to  a  Sales  Sheet,  making  it  the  permanent  origi- 
nal entry  of  goods  sold. 

The  fact  that  some  of  the  largest  houses  use  the  new  method 
proves  its  practicability  and  justifies  its  usage.  The  only  ad- 
vantage gained  by  it,  as  far  as  we  can  see,  is  the  saving  of 
expense  in  binding  a  great  many  Sales  Books,  there  being  no 
saving  in  expense  of  paper.  It  is  more  convenient,  too,  in 
handling  only  the  few  sheets  already  in  use  than  it  would  be  to 
handle  large  books,  only  a  portion  of  which  are  used  for  the 
time  being. 


284  BOOKKEEPING    SIMPLIFIED. 

The  Sales  Sheets  are  also  bound,  that  is,  once  a  month,  and 
put  away  conveniently  for  ready  reference.  The  binding  con- 
sists in  driving  small  \vires  through  the  margin,  the  expense  of 
which  is  a  bagatelle  compared  to  the  leather  or  heavy  canvas- 
covered  binding  of  voluminous  Sales  Books.  The  Sales  Sheets 
seem  to  be  nothing  more  than  an  elaboration  of  our  shipping  - 
ticket  shown  on  page  240. 

The  salesman  takes  down  the  order  on  the  Sales  Sheet  by 
describing  the  articles  sold  and  the  prices.  The  stock  clerk 
selects  the  goods  according  to  Sales  Sheet,  making  a  single  check 
mark  ( y/)  opposite  each  article.  The  goods  are  taken  to  the 
packing-room  accompanied  by  the  Sales  Sheet,  and  as  fast  as  they 
are  put  in  cases  the  packer  cross-checks  or  makes  a  double 
check  mark  (\^^)-  The  Sales  Sheet  is  then  turned  over  to  the 
bill  clerk,  who  makes  the  extensions  and  footing  on  Sales  Sheet 
and  duplicates  it  on  billhead,  then  turns  the  Sales  Sheet  over  to 
the  bookkeeper,  who  examines  the  calculations  and  then  posts 
directly  from  the  Sales  Sheet,  after  which  a  transcript  is  made 
into  a  book,  as  explained  on  page  85,  for  the  purpose  of  totaliz- 
ing the  sales  and  giving  each  department  its  proper  credit  in 
posting.  The  Sales  Sheet  is  initialled  by  each  clerk,  through 
whose  hands  it  passes,  which  vouches  for  the  fact  that  every 
part  of  the  transaction  has  received  proper  attention. 


A  HINT  IN  WRITING  LETTERS. 

In  writing  for  the  press  only  one  side  of  the  paper  should 
be  used,  but  in  business  or  other  correspondence  this  rule  does 
not  apply. 

Business  letters  requiring  two  pages  should  be  written  on 
both  front  and  back  of  a  single  sheet  and  not  on  front  and  third 
page  of  a  folio,  as  is  often  done  by  unbusinesslike  people,  there- 
by causing  unnecessary  bulk  of  paper  in  filing  letters. 

All  correspondence  requiring  more    than    two  pages  should 


A   COMMON-SENSE   VIEW   OF   BOOKKEEPING. 


285 


be  written  on  front  and  back,  then  third  page  and  back — that 
is,  one-two-three  order, — the  same  as  the  matter  is  arranged  in 
books.  It  is  extremely  bad  taste  to  use  third  page  for  second  - 
page  matter,  then  return  to  second  page  for  matter  belonging  on 
third,  thereby  separating  by  the  intervention  of  a  page  the  mat- 
ter on  fourth  page,  which  should  make  close  connection  with 
third-page  matter,  making  very  awkward  reading,  which  to  say 
the  least  is  annoying  to  the  reader. 


DISCIPLINE. 

In  a  large  establishment,  where  there  are  many  employe's 
there  must  be  a  superintendent  or  head  man,  who  is  presumably 
endowed  with  superior  skill,  judgment,  or  qualifications  as  to 
the  business,  by  virtue  of  which  he  is  entitled  to  the  most  ex- 
alted position. 

In  all  controversies  or  issues  arising  between  him  and  his 
subordinates  his  word  should  be  law  and  his  decisions  final, 
subject  to  no  appeal  to  higher  authority  in  the  establishment  in 
the  person  of  his  employer. 

He  should  be  sustained  right  or  wrong,  that  is,  sustained  if 
right  and  removed  if  wrong,  at  all  events  also  sustained  even 
if  wrong,  if  retained  in  his  position.  Not  to  do  so  would  be  to 
bring  his  authority  into  disrespect  and  to  render  his  power  for 
doing  good  impotent. 

If  he  is  too  valuable  to  dismiss  for  an  error  of  judgment,  he 
should  be  told  wherein  he  is  wrong  by  being  called  aside  in 
star-chamber  conference,  as  it  were,  and  not  in  the  presence  of 
those  whom  he  is  expected  to  keep  in  line  of  duty,  for  any  dere- 
liction of  which  he  would  be  held  responsible. 

When  convinced  that  he  is  wrong,  he  can  and  will  in  his 
own  way  make  the  amende  honorable  to  those  whom  he  has  done 
an  injustice,  and  thus  cement  the  mutual  bond  that  binds  all  to 
a  common  cause. 


286  BOOKKEEPING   SIMPLIFIED. 


STAND  ALOOF. 

One  should  not  permit  himself  to  become  too  intimate — in 
other  words  too  fresh — with  his  employer,  either  in  his  business 
or  social  relations;  never  presume  to  make  free  with  him  because 
a  favorite,  but  keep  in  your  own  place  at  a  becoming  and  re- 
spectful distance,  and  thus  by  a  dignified  subordination  and 
submissive  disposition  always  command  his  respect  and  merit 
his  favors,  and  when  the  occasion  arises,  as  it  surely  will, 
when  you  are  called  to  account  for  some  real  or  seeming  short- 
coming, you  will  feel  less  keenly  the  lash  of  authority. 

We  may  feel  that  we  are  superior  intellectually  and  in  busi- 
ness ability  to  those  whom  we  serve,  but  the  very  fact  that 
they  are  our  employers  makes  them  our  superiors  in  their  busi- 
ness relations  toward  us,  which,  if  we  failed  to  recognize,  would 
also  make  them  our  superiors  in  point  of  good  sense  and  appre- 
ciation of  the  right  as  well  as  disapproval  of  the  wrong. 

Another  thing :  one  should  not  work  by  the  clock,  that  is,  not 
leave  a  duty  unperformed,  drop  everything  and  run,  because 
the  clock  indicates  that  the  usual  hour  for  quitting  is  at  hand. 

We  always  made  it  a  point  to  remain  at  our  post  of  duty  as 
long  as  the  boss  remained  at  his,  unless  he  was  pleased  to  excuse 
us.  It  is  a  fatal  error  for  a  clerk  to  presume  to  dictate  to  his 
employer  as  to  what  the  duties  were  he  was  engaged  to  perform 
and  the  time  in  which  he  was  supposed  to  do  them,  as  the  employer 
may  require  something  else  done  not  within  the  scope  of  the 
employe's  ordinary  duties;  hence  he  must  hold  himself  in  readi- 
ness to  do  his  bidding,  or  soon  expect  to  hear  that  unwelcome 
edict — your  services  are  no  longer  required. 

One  should  never  be  above  his  business,  never  be  ashamed 
to  have  others  know  he  is  doing  that  which  enables  him  to  earn 
an  honest  dollar. 


A   COMMON-SENSE   VIEW   OF  BOOKKEEPING.  287 


FRAUD— HOW  DETECTED— HOW  PREVENTED." 

Following  an  expose*  of  a  recent  defalcation  in  a  bank  of  this 
city,  which  started  an  investigation  into  the  accounts  of  other 
similar  institutions  throughout  the  country,  a  daily  paper  offered 
a  handsome  premium  for  the  best  system  of  bookkeeping  that 
would  be  a  safeguard  against  dishonesty.  It  is  safe  to  say  that 
it  is  impossible  to  devise  such  a  system.  Opportunity  makes  a 
thief  and  nothing  but  surveillance  will  prevent  a  dishonest  book- 
keeper from  availing  himself  of  such  an  opportunity  when  it  is 
afforded  him;  hence  his  books  should  be  examined  periodically, 
say  quarterly,  by  a  disinterested  auditor.  This  would  be  a  con- 
stant menace  to  him  and  assurance  that  he  would  be  detected, 
and  as  no  sane  person  would  be  likely  to  jeopardize  a  good  posi- 
tion or  imperil  his  liberty  for  the  small  sum  of  money  he  could 
embezzle  between  these  periods,  surveillance  of  this  kind  would 
be  effective.  The  audit  should  be  made  by  a  different  person 
each  time,  so  as  to  prevent  possible  collusion  of  the  auditor  with 
the  bookkeeper  in  case  the  former  is  susceptible  of  being  cor- 
rupted by  sharing  the  spoils  with  the  latter.  It  would  certainly 
be  a  mean  person  who  would  betray  a  confidence;  for  that 
reason  it  is  said,  "  To  make  a  thief  honest  trust  him."  A  com- 
mon fraud  perpetrated  by  bookkeepers  who  have  natural  pro- 
clivities for  letting  other  people's  money  stick  to  their  fingers  is 
to  falsify  their  footings,  especially  in  the  Cash  Book, — -that  is, 
put  down  a  larger  sum  on  the  credit  side  or  a  smaller  sum  on  the 
debit  side  than  the  figures  amount  to,  or  possibly  put  down  the 
correct  footing  and  carry  forward  the  larger  or  smaller  sum,  as 
the  case  may  be,  to  the  next  page,  which  would  be  less  liable  to 
be  detected  by  a  casual  examination  and  thus  enable  him  to 
abstract  the  excess  of  money  without  throwing  the  cash  out  of 
balance.  If  the  erroneous  figures  occurred  in  the  sundries  credit 
columns,  they  would  make  a  single  entry  on  the  debit  side  of 
some  ledger  account,  most  probably  the  merchandise,  or  add  the 
excess  to  some  large  amount  already  on  that  side,  so  as  not  to 


288  BOOKKEEPING   SIMPLIFIED. 

interfere  with  the  trial  balance.  Such  a  fraud  could  be  de- 
tected only  by  checking  the  posting.  If  the  wrong  figures  ap- 
pear in  the  special  columns  it  would  not  affect  the  trial  balance, 
hence  the  fraud  could  be  unearthed  only  by  reviewing  the  ad- 
ditions. No  one  would  be  foolish  enough  to  be  entrapped  by 
taking  money  put  in  the  drawer  as  a  decoy  by  their  employer, 
which  is  often  done  to  see  whether  it  will  be  accounted  for  as 
cash  over  when  proving  the  cash  next  time.  A  better  and  more 
honorable  way  is  for  the  proprietor  to  examine  the  footings 
daily  in  the  bookkeeper's  absence  until  he  has  assured  himself  of 
the  latter's  honesty,  and  thus  be  enabled  to  detect  and  stop  in 
its  incipiency  the  peculations  of  one  whom  he  had  found  to  be 
dishonest  before  it  had  involved  him  in  ruin. 


TWO  PEN  PICTURES. 

OLD  FOGY. 

A  bookkeeper  of  the  old  school:  His  days  are  of  endless 
toil,  his  nights  are  of 'sleepless  unrest;  his  books  are  in  arrears, 
and  are  never  otherwise,  although  he  works  early  and  late — 
often  until  midnight.  He  makes  many  errors  which  he  can 
never  locate,  hence  his  Trial  Balance  is  never  forthcoming  when 
asked  for.  His  salary  is  consequently  small,  and  no  increase 
can  be  expected  under  such  distressing  circumstances ;  in  fact 
he  is  in  constant  dread  of  losing  his  situation.  He  is  a  worthy 
man,  but  wofully  incompetent.  The  business  has  outgrown 
his  capacity,  •which  is  limited  and  cannot  be  increased  while 
encumbered  by  his  old-fogy  methods.  Instead  of  being  pro- 
gressive he  is  retrogressive,  and  like  a  crawfish  goes  backward 
at  everything  he  does.  He  trudges  along  at  a  paltry  income, 
just  enough  to  supply  pinching  necessities  for  those  who  cling 
to  him  in  sweet  dependence,  but  nothing  to  lay  aside  for  a 
rainy  day,  a  poor  pensioner  upon  the  bounties  of  an  hour.  The 
conditions  that  confront  him  are  appalling,  to  say  the  least.  He 


A   COMMON-SENSE   VIEW   OF  BOOKKEEPING.  289 

ruminates,  he  ponders,  and  he  dreams;  suddenly  he  awakes  to 
the  fact  that  he  is  far  behind  the  times,  a  back  number,  ~as_it 
were,  and  he  resolves  to  emulate  the  example  of  the  prosperous 
young  bookkeeper — Wright's  Protege — who  is  looked  upon  as 
the  brightest  star  in  the  constellation  of  modern  accountants, 
which  is  due  to  the  fact  that  he  is  abreast  with  the  times  and 
follows  the  methods  of  his  preceptor. 

WRIGHT'S  PROTEGE. 

A  few  years  ago  he  was  only  a  useful  man  about  the  office — 
a  factotum — but  knowing  that  the  only  road  to  advancement 
was  by  gaining  useful  information,  he  bought  a  copy  of 
"WEIGHT'S  BOOKKEEPING  SIMPLIFIED,"  and  in  a  short  time 
mastered  double  entry.  Soon  thereafter  the  old  bookkeeper 
was  summoned  to  appear  at  the  main  office  on  high  to  make  a 
final  exhibit  of  his  life's  work — that  is,  he  was  called  hence  to 
return  no  more,  leaving  a  vacancy  that  an  ordinary  machine 
bookkeeper  could  not  fill.  As  Protege  wrote  a  good  hand,  he 
was  told  to  take  charge  of  the  books  temporarily,  until  a  new 
and  competent  bookkeeper  could  be  engaged.  The  proprietor 
soon  discovered  that  a  better  man  than  the  new  incumbent 
would  be  hard  to  find,  as  he  was  really  an  improvement  over 
his  predecessor.  His  salary  was  at  once  increased,  and  has  been 
advanced  yearly.  Next  year  he  is  promised  a  partner's  interest 
in  the  business.  No  wonder  he  sleeps  sweetly  and  dreams  in 
ecstasy.  He  never  has  to  work  after  business  hours,  but 
always  quits  on  regular  time.  He  keeps  his  books  posted  to 
date,  although  he  has  twice  as  much  to  do  as  old  fogy,  and  has 
plenty  of  time  to  read  his  morning  paper,  and  an  hour  for 
lunch.  Why?  Because  he  is  a  man  of  BUSINESS  METHODS  and 
knows  how  to  take  advantage  of  his  work.  He  leads  where 
others  could  only  follow.  He  praises  the  bridge  that  bears  him 
safely  over,  and  pins  his  faith  to  "  WRIGHT'S  BOOKKEEPING- 
SIMPLIFIED,"  to  which  he  attributes  his  success,  and  advises 
you  to  do  likewise. 


290  BOOKKEEPING   SIMPLIFIED. 


EXAMINATION  FOR  BOOKKEEPER'S  POSITION. 

A  firm  in  this  city,  say,  Smith  &  Jones,  wanted  a  bookkeeper. 
Each  applicant  for  the  position  was  given  a  verbatim  copy  of  the 
following  facts  and  figures,  with  "  COMMENTS,"  showing  what  was 
required,  viz. : 

BALANCES   BROUGHT   DOWN  JANUARY   i,    1900. 

Cash  and  bank $4,618. 11 

Jones $29,377.60 

Smith 15,078.28 

Stock  of  goods 10,901.25 

Bills  receivable 3,250.00 

Bills  payable 6,400.00 

Keserve  for  bad  debts 1,500.00 

Reserve  for  discount 1,857.00 

Customers'  balances 37,142.12 

Creditors'  balances 10,348.60 

Horses,  carts,  etc 2,400.00 

Premises 6,250.00 

CASH  AND  BANK  TRANSACTIONS  DURING  THE  YEAR. 

RECEIPTS.— From  Customers,  $55,449.02.     For  Notes,  $32,112.89. 

PAYMENTS.— To  Creditors,  $40,783.55.  Wages,  $4,213.02.  Horses'  keep, 
etc.,  $1,634.53.  General  expense,  $1,212.53.  Notes  met,  $21,600.00.  Smith's 
drawing  account,  $5,750.00.  Jones'  drawing  account,  $3,100.00.  Salaries 
(S.  &  J.),  $2,675.00.  Cash  on  hand,  $11,211.39. 

OTHER  TRANSACTIONS  DURING  THE  YEAR. 

Purchases,  $69,949.18.  Sales,  $81,608.62.  Discount  allowed  customers, 
$3,242.62.  Discounts  allowed  by  creditors,  $1,062.55.  Bad  debts  written  off, 
$2,177.55.  Received  notes  from  customers,  $36,930.  Gave  notes  to  creditors, 
$15,200.  Stock  on  hand  December  31,  $5,695. 

COMMENTS. 

Raise  Ledger  accounts  and  make  requisite  entries  to  bring  results  of  cash 
account  into  the  Ledgar.  Make  and  post  journal  entries  dealing  with  the 
other  transactions,  also  those  necessary  to  credit  partners  with  five  per  cent, 
on  their  capital  at  first  of  new  year  and  to  charge  ten  per  cent. ,  depreciation 
in  value  of  Horses,  Carts,  etc.,  and  reserve  same  proportion  for  discount  on 
.outstanding  balance,  as  in  previous  year.  Prepare  a  Trial  Balance  December 


A   COMMON-SENSE  VIEW  OF   BOOKKEEPING.  291 

31,  1900.  Make  and  post  journal  entries  requisite  to  make  up  Trading  and 
Profit  and  Loss  accounts  and  distribute  the  net  result  between  the  partners, 
two-thirds  Smith,  one-third  Jones.  Prepare  balance  sheet. 

This  is  all  perfectly  businesslike  and  an  ingenious  test  of  abil- 
ity, and  was  evidently  the  work  of  one  familiar  with  accounts,  but 
there  is  an  error  of  omission  which  proves  that  he  was  not  an  ex- 
pert. An  ordinary  bookkeeper  will  not  discover  the  omission,  but 
an  expert  accountant  will  notice  it  at  once.  We  would  render  the 
statement  just  as  asked  for,  presuming  the  omission  was  inten- 
tional ;  but  it  would  not  be  acceptable  to  us  if  we  were  a  partner 
and  was  going  to  retire  from  the  business,  as  we  would  get  much 
the  worst  of  it  by  settling  on  that  basis.  It  is  safe  to  say  that 
eighty  per  cent,  of  those  who  call  themselves  bookkeepers  and  apply 
for  such  positions,  cannot  make  a  systematic  and  businesslike 
statement  from  the  foregoing  exhibit.* 

ANOTHER   TEST   OF   ABILITY. 

WRIGHT  and  NOBLE  are  equal  partners  in  business.  As  the 
business  progresses  they  come  into  joint  possession  of  Smith's  note 
for  $2,000.  In  the  mean  time  WRIGHT  overdraws  his  account, 
$500.  In  order  to  make  good  the  overdraft  and  equalize  their 
interests  again  he  forfeits  at  a  sacrifice  his  half  interest  in  SMITH'S 
note  of  $2,000,  whereby  NOBLE  becomes  sole  owner  of  it. 

The  bookkeeper  is  required  to  adjust  the  matter  on  the  firm's 
books. 

Many  years  ago,  when  the  writer  was  engaged  as  a  young  book- 
keeper, he  had  an  interesting  interview  with  the  late  Professor 
Marsh,  who  was  then  teaching  bookkeeping  according  to  old- 
school  methods. 

With  a  view  of  testing  our  ability  as  a  practical  bookkeeper  he 
submitted  the  foregoing  proposition  to  us.  The  fact  that  we  were 
not  dreamers  but  wide  awake  to  realities,  accustomed  to  dealing 

*  If  the  reader  will  send  us  name  and  address  and  30  cents  in  postage 
stamps  we  will  send  by  return  mail  a  copy  of  the  entries  and  statement  we 
made  for  the  successful  applicant  in  this  case. 


292  BOOKKEEPING    SIMPLIFIED. 

with  substances  and  not  shadows,  made  it  easy  for  us  to  adjust  the 
matter  which  to  him  seemed  complicated.  The  simple  manner  in 
which  we  disposed  of  it  was  a  surprise  to  the  distinguished  old  pro- 
fessor, who  admitted  that  our  method  was  most  ingenious,  but  not 
the  way  he  would  do  it.  He  made  more  entries  of  it  than  we  did. 
Our  way  was  practical  and  business-like ;  his  was  theoretical  and 
school-like. 

BRANCH  HOUSES. 

A  branch  house  is  treated  as  if  it  was  a  separate  concern,  and 
the  parent  house  is  treated  the  same  way  by  its  branches.  If  a 
firm  in  New  York  has  a  branch  in  Chicago,  the  account  name  for 
it  would  be  Westevn  Department  or  Chicago  store,  and  on  the  books 
of  the  branch  house  the  account  name  for  the  parent  house  would 
be  Eastern  Department  or  New  York  Office  (or  store).  Both  ac- 
counts would  be  treated  same  as  other  personal  accounts — that  is, 
would  be  subject  to  the  same  eight  conditions  and  governed  by  the 
same  eight  supplementary  rules  (see  page  30). 

EXPERT  ACCOUNTANT. 

Bookkeepers  as  a  rule  soon  begin  to  call  themselves  expert  ac- 
countants when  they  can  manage  a  small  set  of  books  in  a  way 
that  does  not  require  even  ordinary  skill,  and  can  make  a  trial  bal- 
ance successfully,  containing  probably  less  than  one  hundred  ac- 
counts. Such  an  assumption  on  their  part  is,  to  say  the  least,  a 
travesty  upon  the  facts  in  the  case,  as  they  have  no  conception  as 
to  the  duties  of  an  expert  accountant. 

"  The  oak  tree  was  an  acorn  once  and  fell  upon  the  earth 
Until  sun  and  showers  nourished  it  and  gave  the  oak  tree  birth. " 

A  bookkeeper  sustains  about  the  same  relation  to  an  expert 
accountant  that  an  acorn  does  to  the  oak  sapling.  One  is  embry- 
onic of  the  other  in  both  cases. 

"In  most  people's  mind  the  idea  of  an  accountant  is  associated 
with  thief  catching;  he  is  considered  a  sort  of  Sherlock  Holmes, 
or  Hawkshaw,  a  detective  making  a  specialty  of  trapping  default- 


A   COMMON-SENSE   VIEW   OF   BOOKKEEPING.  293 

ing  bookkeepers  and  cashiers ;  others  again  consider  him  a  sort  of 
higher  grade  of  bookkeeper,  but  both  conceptions  are  far  from-the 
truth.  Catching  thieves  is  only  incidental  to  an  accountant's  busi- 
ness life,  and  is  the  most  unpleasant  part  of  it,  and  while  an  ac- 
countant, as  a  matter  of  course,  must  be  an  expert  bookkeeper,  this 
knowledge  is  only  an  accessory,  just  the  same  as  anatomy  or  path- 
ology are  only  some  of  the  many  things  a  physician  must  know. 

"  The  bookkeeper  is  one  of  the  numberless  wheels  constituting 
the  complicated  mechanism  of  modern  commercial  life.  He  is  a 
link  in  a  chain,  connecting  other  links.  The  accountant  stands 
outside  of  this  mechanism  somewhat  like  the  consulting  engineer 
whose  opinion  is  sought  in  the  construction,  mode  of  operation,  or 
improvement  of  the  mechanism,  who  is  called  upon  to  locate  dis- 
orders or  causes  for  the  failure  of  a  part  or  whole  of  the  mechanism 
to  do  its  duty,  and  to  suggest  remedies.  He  is  like  the  physician 
in  well-regulated  families  who  is  not  only  called  when  the  disease 
has  appeared  and  has  made  incursions  into  the  family's  well-being, 
but  whose  opinion  is  from  time  to  time  sought  for  the  purpose  of 
keeping  the  health  of  the  family  up  to  the  highest  possible  standard. 

"  Like  the  physician  or  the  consulting  engineer,  the  accountant 
must  not  be  a  specialist ;  he  must  not  only  be  thoroughly  acquaint- 
ed with  one  organ  of  the  body  or  with  the  nature  of  a  particular 
part  of  the  mechanism,  but  he  must  know  all  of  it.  The  true  re- 
lation of  each  part  to  the  other  must  be  an  open  book  to  him.  He 
cannot  and  must  not  be  a  theorist  or  a  pedant.  He  must  be  a 
man  of  wide  and  varied  experience,  having  the  ability  to  apply  his 
experience  on  scientific  principles,  which  are  strictly  denned,  and 
constitute  the  science  of  accounting.  Such  a  man  will  be  of  the 
greatest  benefit,  even  to  the  healthiest  business  organism.  No 
matter  how  well  selected,  well  appointed,  and  well  directed  the 
parts  of  such  an  organism  are,  it  is  of  the  greatest  value  that  they 
should  be,  from  time  to  time,  inspected  by  some  one  whose  com- 
bined theoretical  and  practical  knowledge  enables  him  to  scan  a 
wider  horizon  than  is  possible  for  the  director  or  directors  of  a 
particular  business  organization. 


294  BOOKKEEPING   SIMPLIFIED. 

"It  is  not  always  dishonesty  or  ignorance  on  the  part  of  the 
coadjutors  of  the  head  of  a  business  which  brings  it  to  grief,  or,  at 
least,  causes  serious  disorders.  A  modern  business  organization, 
be  it  firm  or  corporation,  is  like  the  modern  warships,  a  compli- 
cated piece  of  machinery,  needing  protection  in  more  than  one 
sense  of  the  word.  The  crew,  from  captain  down  to  the  stoker, 
are  all  engaged,  or  expected  to  be  so,  in  one  single  pursuit,  and 
that  is  to  lead  the  ship  to  victory,  to  success.  The  captain,  stand- 
ing on  the  bridge,  directs  the  whole  of  the  complicated  machinery. 
It  is  important  for  him  to  know  that  he  can  depend  upon  the  effi- 
ciency of  every  part  and  parcel  of  it,  and  to  be  conscious  of  not 
having  overlooked  some  detail — one  single  loose  screw,  one  single 
bent  pin  may  expose  the  ship  to  disaster.  Therefore  the  parts  of 
this  ship  undergo  frequent  inspections ;  first,  to  ascertain  whether 
everything  and  everybody  is  in  working  trim;  second,  whether 
some  appliances  need  to  be  improved  or  even  substituted,  so  as  to 
keep  the  ship  at  the  highest  possible  fighting  standard. 

"  Let  the  stockholders  of  a  corporation  once  suspect  that  there 
is  '  something  rotten  in  the  State  of  Denmark,'  how  fast  the  value 
of  the  stock  goes  down!  One  breath  affecting  the  standing  or 
methods  of  a  business  will  wreck  it." 

NINTH  AFTERTHOUGHT. 

Receiving  anything  is  a  fact ;  deriving  a  benefit  from  anything 
is  an  qffect.  The  former  has  to  do  with  tangible  existence ;  the  lat- 
ter with  nominal  existence.  Without  facts  there  can  be  no  effects. 

Unless  one  can  discriminate  between  the  meaning  of  the  words 
tangible  and  nominal  the  rules  on  page  29,  that  govern  representa- 
tive and  speculative  accounts,  will  seem  to  conflict. 

The  mind  of  the  student  naturally  concludes  that  making,  in 
other  words  gaining,  is  equivalent  to  receiving ;  but  such  is  not 
the  case.  A  percentage  can  neither  be  received  nor  given  out,  be- 
cause it  is  intangible,  hence  intransitive.  Things  can  neither  be 
gained  nor  lost  from  a  bookkeeping  viewpoint. 

Acquire  the  rules  as  they  are  ;  not  as  you  think  they  ought  to  be. 


FIFTH  PART. 


WALL    STREET 

MATTERS. 


WALL  STREET  TERMS. 

ACTION. — Execution  of,  or  carrying  orders  into  effect  imme- 
diately. 

BEAR. — A  believer  in  lower  prices,  one  who  sells  before  he 
buys. 

BULL. — A  believer  in  higher  prices,  one  who  buys  and  holds 
for  an  advance. 

BUCKET  SHOP. — A  place  where  the  proprietor  usually  takes 
the  opposite  side  of  a  customer's  deal  instead  of  having  it  exe- 
cuted on  the  Exchange.  He  coppers  the  customer's  let.  If  the 
customer  wins,  the  proprietor  loses,  and  when  he  is  asked  for 
profits  or  an  accounting  he  fails  usually,  that  is,  if  the  amount 
justifies  it.  Moral. — Do  not  trade  in  a  bucket  shop;  in  case  you 
do,  never  allow  profits  to  accumulate  but  draw  out  as  fast  as  made. 

CALL. — A  privilege  to  demand  stock  any  time  within  a  speci- 
fied time  at  market  price  above  a  fixed  price. 

COVERING. — Buying  back  stock  when  short. 

CORNER. — A  stock  is  cornered  when  it  is  owned  or  controlled  by 
a  few,  who  can  demand,  and  usually  get,  any  price  they  wish  for  it. 
Those  short  of  the  stock  being  required  to  deliver  what  they  sold, 
must  pay  the  price,  which  forces  tremendous  rise.  Following  is 
an  example  of  the  effect  of  a  corner,  the  greatest  in  the  history  of 
Wall  Street.  The  closing  price  on  Saturday,  May  4,  1901,  of 
Northern  Pacific  Common  ("Little  Nip ")  was  $110  per  share.  It 
opened  on  the  following  Monday  morning  at  $114,  and  during 
the  day  advanced  to  $133,  closing  at  $127^.  It  continued  to  ad- 
vance at  the  same  rate  for  the  next  two  days,  opening  Thursday 
morning  (May  9th)  with  500  shares  @  $170;  it  then  went  up  in 
leaps  and  bounds,  5  to  50  points,  at  a  time  to  $1,000  per  share 
within  one  hour,  or  by  11  o'clock  A.M.  There  was  one  deal  of  300 


298  WALL   STREET   MATTERS. 

shares  at  the  highest  price.  Reaction  then  set  in  and  the  down- 
ward movement  was  equally  violent  with  many  fluctuations  up- 
ward and  downward  during  the  day,  closing  at  $325  per  share,  a 
net  gain  of  $165  per  share  in  one  day.  In  order  to  raise  the 
money  to  meet  these  ruinous  prices  other  stocks  were  thrown  on 
the  market  at  sacrifices  of  from  5  to  60  points  lower  throughout 
the  whole  list  than  closing  prices  on  previous  day,  causing  a  panic 
that  made  the  famous  "  Black  Friday "  pale  into  insignificance  for 
the  time  being,  although  of  shorter  duration.  Corners  enrich  a 
few  but  impoverish  many. 

CURB. — A  certain  locality  on  Broad  Street  where  a  few  meet 
in  the  open,  that  is,  on  the  curb,  to  deal  in  stocks  not  listed  on 
the  Exchange.  One  passing  along  Broad  Street,  between  10  .A.M. 
and  3  P.M.  any  business  day  can  see  this  little  body  of  men  hud- 
dled together  apparently  in  mysterious  conclave.  They  are  called 
curb  brokers.  See  illustration  on  page  296. 

GRANGERS. — Railroads  running  into  Chicago,  viz.,  Chicago, 
Burlington,  and  Quincy :  Chicago,  Milwaukee,  and  St.  Paul;  Chi- 
cago, Rock  Island,  and  Pacific ;  Chicago  and  Northwestern. 

GOULD  STOCKS. — Missouri  Pacific,  Texas  Pacific,  Manhattan, 
Western  Union,  etc. 

INSIDERS. — Those  who  own  controlling  interest  and  regulate 
prices  to  suit  themselves. 

INDUSTRIALS. — Companies  engaged  in  manufacturing,  such  as 
American  Sugar,  American  Tobacco,  Continental  Tobacco,  U.  S. 
Steel,  U.  S.  Leather,  U.  S.  Rubber,  etc. 

LAMB. — A  greenhorn  in  the  business.  One  who  enters  Wall 
Street  usually  with  plenty  of  money  and  no  experience  and,  as  a 
rule,  leaves  the  Street  with  plenty  of  experience  and  no  money. 

LIQUIDATING. — Selling  out  part  or  all  of  an  investment. 

LONG. — Holding  stocks  bought  in  anticipation  of  a  rise. 

MANIPULATION. — Making  prices  to  suit  those  who  have  con- 
trolling interest. 

MARGIN. — Money  or  collateral  deposited  to  cover  fluctuation 
in  prices. 


WALL   STREET   TERMS.  29$ 

POINT. — One  dollar  per  share.  Fractional  points  -J-,  J,  |,  £,  f , 
|,  -J.  If  one  buys  100  shares  of  stock  on  the  Consolidated  ~Ex^ 
change  and  the  price  advances  two  points,  he  makes  $200,  less 
the  charges,  that  is  -J  of  a  point  com.  $12.50,  and  two-cent  rev- 
enue stamp  for  each  share  $2;  net,  $185,50.  If  he  sells  100 
shares  and  the  price  declines  two  points,  he>also  makes  $200,  less 
the^^^charges,  $l#tH),  or  $1^.50  net./^^  A-^vfl^- 

POOL. — A  combination  of  lookers,  or  kather  a  combination 
their  capital  for  the  purpose  of  controlling  certain  stocks.  Kind 
of  a  distant  relation  to  a  corner,  but  less  powerful  and  far-reaching 
in  effect. 

PUT. — A  privilege  to  deliver  stocks  at  market  price  any  time 
within  a  specified  time  below  a  fixed  price. 

PYRAMIDING. — Investing  profits  as  fast  as  they  accumulate. 
It  is  a  very  dangerous  method  and  usually  results  in  loss  of  margin 
— PARLAYING. 

REACTION. — Making  lower  prices,  usually  the  result  of  realiz- 
ing or  taking  profits. 

RALLY. — Making  higher  prices,  the  result  of  shorts  covering. 

REALIZING. — Closing  deals  to  take  profits. 

SHORT. — Having  sold  stock  one  does  not  have,  .expecting  a 
decline. 

STOP  ORDER. — Fixing  a  price  at  which  to  close  a  deal  and 
thereby  limit  loss  if  one  is  on  the  wrong  side. 

SCALPERS. — Professional  traders  who  get  in  and  out  with 
small  gain  or  loss — a  point  or  less. 

STRADDLE. — A  privilege  covering  both  puts  and  calls. 

TAPE. — A  white  paper  ribbon,  f  inch  wide  and  about  300  feet 
long,  rolled  so  it  can  be  adjusted  to  the  ticker  in  such  a  way  that 
the  latter  can  supply  itself  as  fast  as  required  for  quotations  or 
news. 

TICKER. — A  small  electrical  instrument  or  machine  that  auto- 
matically registers  in  printed  style  on  the  tape  every  transaction  that 
takes  place  on  the  Exchange.  The  tape  is  an  indispensable  concomi- 
tant of  the  ticker,  without  the  former  the  latter  would  be  useless. 


300  WALL   STREET   MATTERS. 

TRACTIONS. — Street  railroads,  Metropolitan,  Third  Avenue, 
Brooklyn  Eapid  Transit,  Manhattan  Elevated. 

UNDER  THE  RULE. — When  a  broker  fails  his  commitments 
;are  closed  out  by  the  chairman  according  to  the  rules  of  the  Ex- 
change for  the  protection  of  other  interested  brokers.  Such  trans- 
actions appear  on  the  tape  as  U.  E. 

WASH  SALES. — Mutual  agreement  between  brokers  to  buy 
and  sell  among  themselves  to  create  false  impression  as  to  move- 
ment in  certain  stocks,  part  of  the  agreement  being  that  such 
deals  are  declared  off  after  the  movement  is  thoroughly  under  way 
and  in  the  hands  of  others. 


WALL  STREET  METHODS. 

1.  This  is  a  subject  prolific  of  thoughts  worthy  of  engrossing  the 
pen  of  one  more  versatile  than  the  writer  assumes  to  be.     We 
write  from  our  own  experience  and  observation,  which  we  admit  is 
limited,  covering  a  period  of  but  a  few  years.     Hence  our  conclu- 
sions may  not  be  as  correct  nor  our  views  as  broad  and  comprehen- 
sive as  those  of  some  who  will  no  doubt  peruse  these  pages,  and 
whom  for  that  reason  we  do  not  presume  to  enlighten  or  interest. 
Our  main  object  is  to  explain  later  how  books  are  conducted  in  a 
broker's  office;  and  in  order  to  do  that  it  is  necessary  to  look  into 
the  peculiarities  of  their  business. 

2.  There  are  two  great  classes  that  do  business  in  Wall  Street, 
viz.,  INVESTORS  and  SPECULATORS,  the  latter  being  subdivided  into 
two  other  classes  commonly  called  BULLS  and  BEARS. 

3.  INVESTORS  are  those  who  buy  stock  outright  at  its  intrinsic 
value,  and  are  satisfied  to  make  a  reasonable  rate  of  interest  on 
their  money  without  regard  to  fluctuations  in  the  market  prices. 

4.  It  goes  without  saying  that  this  class  has  ample  means  to 
carry  out  its  undertakings  and  eventually  gets  all  the  money. 

5.  SPECULATORS  are  those  who  buy  or  sell  stocks  on  margin 


WALL   STREET   METHODS.  301 

with  a  view  of  benefiting  alone  by  the  fluctuations  in  market 
valuations. 

6.  As  an  example  we  take  a  stock  that  paid  12  per  cent  per 
annum  for  many  consecutive  years,  the  par  value  of  which  is  $100 
per  share,  the  market  value  having  fluctuated  during  the  writer's 
observation  from  $95  to  $180  per  share. 

7.  The  INVESTOR  who  is  satisfied  to  make  6  per  cent  per  an- 
num on  his  capital  could  afford  to  pay  $200  per  share  for  the 
stock  in  question  and  consider  it  intrinsic  value  for  his  money,  so 
long  as  he  felt  assured  that  the  12  per  cent  rate  would  be  main- 
tained ;  but  inasmuch  as  there  never  has  been  a  time  when  he 
would  have  been  required  to  pay  $200  per  share  for  this  stock,  his 
pro  rata  of  interest  would  have  been  as  much  more  than  6  per  cent, 
as  the  price  per  share  was  less  than  $200. 

8.  The  wide  difference  between  the  highest  and   the   lowest 
price  of  this  stock  and  many  others  is  what  brings  to  the  fore  the 
Speculator — Bovine  or  Bruin — as  the  opportunity  would  suggest. 

9.  At  the  minimum  price  the  BULLS  would  be  rampant  or  ag- 
gressive, as  they  would  feel  assured  that  INVESTORS  would  pay 
more  than  the  current  price  for  stocks;  and  as  a  matter  of  fact  the 
bidding  which  begins  between  the  INVESTORS  and  the  BULL  specu- 
lators (BEARS  remaining  under  cover  for  the  present)  brings  about 
the  advance  that  the  Speculator  expected. 

10.  When  this  state  of  affairs  has  continued  for  several  days, 
and  as  a  consequence  prices  have  advanced  from  ten  to  thirty 
points,  which  often  has  been  the  case,  even  when  the  market  is  in 
a  normal  state,  it  would  then  be  a  question  in  the  mind  of  his  Bo- 
vine highness  as  to  whether  or  not  the  INVESTOR  would  pay  a  still 
higher  price;  and,  believing   that  he  would  not,  the  speculator 
begins  to  realize — in  other  words,  begins  to  sell  the  stock  he  is  long 
of  and  take  his  profit,  which  would  be  the  difference  between  the 
price  at  which  he  sells  and  at  which  he  had  previously  purchased. 

11.  At  this  stage  of  proceedings  the  BEAR  makes  his  advent 
and  begins  to  sell  short,  as  it  is  called,  because  he  believes  he  can 
buy  later  at  a  much  less  price ;  and  as  the  INVESTOR  has  all  he 


302  WALL   STREET   MATTERS. 

wants,  buying  ceases  and  a  reaction  sets  in,  that  is,  offering  stock  at 
a  fraction  less,  which  starts  a  downward  movement,  often  culmi« 
nating  in  a  big  break  or  decline  in  prices,  possibly  back  to,  or  even 
lower  than,  the  last  minimum  which  INVESTORS  considered  intrin- 
sic value. 

12.  When  any  stock  can  be  bought  for  less  than  it  is  worth, 
new  INVESTORS  are  ready  to  buy,  a  fact  BEARS  are  well  aware  of; 
hence  they  begin  to  cover,  as  it  is  called— that  is,  turn  buyer  in- 
stead of  seller,  thus  gaining  the  difference  between  the  price  at 
which  they  buy  in  and  at  which  they  previously  sold. 

13.  The  big  BEARS,  who  are  heavily  short  and  desire  to  cover 
at  a  lower  price,  will  select  a  weak  stock  and  raid  it  by  offering 
1,000,  2,000,  3,000,  5,000,  10,000  shares  in  bewildering  succes- 
sion.    The  result  is  a  big  break  in  that  stock  within  a  few  min- 
utes, which  causes  &  sympathetic  break  throughout  the  whole  list. 
The  money-powerful  BULLS  who  desire  to  unload  at  higher  prices, 
and  for  that  reason  are  determined  to  force  prices  upward,  snap  up 
these  big  lots  as  quickly  as  a  hungry  trout  would  a  minnow. 

14.  Here  is  where  the  real  tug  of  war  begins  and  rages  furi- 
ously for  hours  between  the  BULLS  and  the  BEARS,  the  INVESTORS 
remaining  in  the  background  as  disinterested  onlookers,  that  is  they 
do  not  participate  in  the  buying  or- selling  but  reap  a  rich  harvest 
in  lending  their  holdings  at  high  rates  of  interest  which  partly 
accounts  for  the  fact  that  they  in  time  get  all  the  money. 

It  is  a  battle  royal  between  money  giants,  and  fortunes  are 
often  made  and  lost  in  a  single  day,  thus  proving  the  great  possi- 
bilities of  Wall  Street,  such  as  do  not  exist  elsewhere.  Prices 
are  high  and  low  alternately,  fluctuating  upward  and  downward 
like  the  rise  and  fall  of  the  tide.  In  wooing  fickle  fortune  in  Wall 
Street  go  with  the  tide,  and  she  will  smile  upon  you ;  but  to  go 
against  it  is  to  cause  smiles  to  give  place  to  frowns.  The  great 
secret  is  to  know  when  the  ebb  and  flow  begins. 

15.  Water  seeks  its  own  level,  which  is  fixed  by  its  source.    The 
prices  of  stocks  may  not  seek,  but  will  in  time  find  their  level  too, 
which  is  also  fixed  by  their  source ;  and  the  source  in  this  case  is 


WALL   STREET  METHODS.  303 

the  promoters  or  insiders  who  know  the  real  worth,  which  is  meas- 
ured by  interest-earning  capacity.  It  requires  artificial  force^  to 
make  anything  rise  above  its  level;  and  when  that  force  is  ex- 
hausted, natural  force  will  send  it  downward  again.  The  higher 
the  ascent  the  greater  the  danger,  and  the  more  rapid  the  descent ; 
there  is  but  little  danger  at  the  level.  The  old  and  familiar  saying, 
"Everything  that  goes  up  must  come  down,"  is  true  when  it  relates 
to  material  things  that  are  governed  by  the  law  of  nature ;  but  it 
is  often  fallacious  when  applied  to  the  price  of  stocks,  although  it 
is  the  BEAR'S  great  watchword,  and  he  gives  it  as  a  reason  for  the 
hope  that  is  within  him  that  he  is  on  the  right  side. 

No  artificial  force  has  ever  been  put  in  motion  that  is  perpet- 
ual or  inexhaustible.  Natural  force  is  perpetual,  which  would 
make  it  seem  that  those  who  are  oh  the  side  governed  by  natural 
force  have  the  best  of  it.  As  the  Bear's  greatest  opportunities  are 
when  prices  are  the  highest,  they  are  on  the  safe  side  because  it  is 
natural  for -prices  to  go  their  way  eventually.  It  is  dangerous  to 
be  long  of  stocks  above  the  level ;  it  is  equally  dangerous  to  be 
short  of  them  below  the  level. 

It  does  not  follow  necessarily  that  an  advance  in  the  price  of 
stocks  is  the  result  of  artificial  force  called  manipulation  ;  it  may 
be  a  natural  result  of  improved  conditions  enhancing  the  value  and 
justifying  a  new  and  higher  level.  Professional  speculators  can 
easily  discriminate  between  the  two  causes  of  an  upward  move- 
ment. The  inexperienced  public  cannot  so  discriminate. 

SURE  WINNERS. 

16.  It  is  safe  to  say  that  INVESTORS  are  the  only  sure  winners, 
because  when  they  choose  to  speculate  they,  as  a  rule,  take  the 
short  side — that  is,  sell  short  only  when  prices  are  higher  than 
when  they  invested — that  is,  higher  than  intrinsic  value,  as  they 
buy  only  at  real  worth.  In  case  they  go  still  higher  beyond  their 
financial  reach  they  can  deliver  the  shares  they  own  and  still  be  a 
winner,  the  difference  between  purchasing  price  and  selling  price 
without  regard  to  market  price.  In  case  the  price  decline  imme- 


304:  WALL   STREET   MATTERS. 

diately  after  they  sell,  they  can  luy  in  again  at  a  profit  without- 
parting  with  their  original  investment. 

17.  Thus  their  chances  of  losing  are  reduced  to  a  minimum, 
inasmuch  as  they  are  not  forced  to  sell  their  shares  in  case  of  a 
decline,  but  always  have  what  they  paid  for  at  intrinsic  value; 
and  it  is  only  a  question  of  time  when  the  tug  of  war,  before  al- 
luded to,  will  force  the  price  back  to  their  purchasing  price.     It 
takes  several  months  to  manipulate  the  price  of  stocks  upward 
from  twenty  to  thirty  points.     It  requires  but  a  single  day  to 
smash  them  or  send  them  downward  that  much. 

WHICH   HAS   THE   BEST   OF   IT? 

It  seems  to  us  as  if  the  BEARS  have  the  best  of  it. 

18.  Inasmuch  as  Investors  get  all  the  money  in  the  long  run,, 
and  the  fact  that  they  side  with  the  Bears  when  they  choose  to 
speculate  for  the  reasons  already  assigned,  is  the  best  evidence  that 
BEARS  have  the  lest  of  it.     Professional  speculators  are  too  smart 
as  a  rule  to  sell  anything  below  its  real  value. 

19.  It  does  not  follow  that  one  must  go  short  to  be  on  the  side 
with  the  BEARS,  as  they  do  not  always  sell  but  also  "buy  when  the 
conditions  favor  a  protracted  high  market.     The  sellers  in  such  a 
market  are  not  BEARS  only  but  also  BULLS  themselves,  who  sell  to 
secure  profits. 

20.  A  movement  in  stocks  either  way  is  governed  by  the  law 
of  supply  and  demand.     The  greater  the  demand  the  less  the  sup- 
ply and  the  higher  the  prices.     When  the  demand  ceases,  a  new 
supply  is  suddenly  discovered  by  the  BEARS,  and  prices  take  a 
tumble. 

BEARS'   ADVANTAGES. 

21.  Conditions  often  outweigh  capital  in  this  matter,  and  there 
are  more  conditions  that  favor  the  BEARS  than  there  are  favorable 
to  their  opponents,  such  as  war  and  rumors  of  war ;  over-produc- 
tion in  manufactured  articles ;    strikes  among  the  great  army  of 
employees ;  closing  factories ;  bad  crops ;  reducing  or  discontinuing 


WALL   STREET   METHODS.  305 

dividends ;  death  of  some  prominent  man  ;  high  rates  of  interest  ; 
inflated  prices ;  approaching  elections,  etc.,  all  of  which- cause 
stocks  to  decline. 

BULLS'   ADVANTAGES. 

22.  Universal   prosperity ;    low    rates   of    interest ;     oversold 
market ;   participation    of    the    inexperienced  public;    increased 
earnings  which  justify  a  belief  in  larger  dividends — all  conduce 
to  higher  prices. 

23.  In  order  to  speculate  with  any  degree  of  safety  one  must 
study  the  causes  and  conditions  that  favor  both  sides;  also  must 
know  something  about  the  intrinsic  value  of  the  stock  he  chooses- 
to  deal  in,  which  would  be  governed  by  its  earning  power. 

24.  It  is  a  well-known  fact  that  the  great  majority  of  specu- 
lators lose  their  money ;  it  is  also  a  well-known  fact  that  the  ma- 
jority buy  stocks  instead  of  sell,  which  proves  the  correctness  of 
the  conclusion  that  BEARS  have  the  best  of  it.     It  is  only  a  ques- 
tion of  time  when  the  BULLS  are  left  with  the  lag  to  hold  and  both 
ends  open. 

25.  One's  first  experience  in  Wall  Street  is  on  the  long  side, 
which  is  due  partly  to  the  fact  that  he  is  loath  to  sell  that  which 
he  does  not  own.     Furthermore,  he  knows  that  the  limit  of  a 
downward  movement  is  the  bottom,  whereas  an  upward  movement 
is  practically  unlimited  and  the  top  may  be  beyond  his  financial 
reach  (see  Corner,  page  297).     "OLD  COMMODORE,"  the  great-grand- 
sire  of  the  present  generation  of  Vanderbilts,  to  whom  they  owe 
their  colossal  fortune  and  financial  supremacy,  said:  "NEVER  SELL 

WHAT  YOU  DO  NOT  OWN  and  NEVER  BUY  WHAT  YOU  CANNOT  PAY 

FOR."  That  was  the  SECRET  of  his  success  and  the  GREAT  SECRET 
OF  WALL  STREET  BUSINESS  in  a  nutshell. 

26.  We  know  of  a  certain  bank  stock  (not  listed  on  the  ex- 
change) that  could  have  been  bought  a  few  years  ago  at  10  per 
cent  above  par;  it  could  not  be  bought  now  for  3,000  per  cent  ad- 
vance, and  the  end  is  not  yet.     If  one  had  sold  or  been  short  1,000 
shares  of  that  stock  at  par,  his  ruin  would  have  been  inevitable.    On 


306  WALL   STREET   MATTERS. 

the  other  hand,  if  he  had  bought  1,000  shares  at  par,  his  fortune, 
at  this  writing,  would  have  been  over  $3,000,000,  a  certainty  un- 
surpassed even  by  the  possibilities  of  a  Klondyke.  In  the  face  of 
such  startling  facts  who  can  doubt  the  wisdom  of  judicious  invest- 
ment and  cautious  speculation? 

DANGER   IS   UBIQUITOUS. 

27.  One  often  reads  about  defalcations  and  ruin  the  result  of 
speculating  in  stocks ;  hence  arises  the  hue  and  cry  of  danger  in 
Wall  Street.     The  same  causes — ignorance   and    inexperience — 
would  produce  the  same  effects — losses  and  failures — in  any  other 
field  of  industry.     To  invest  capital  in  any  kind  of  business  one 
does  not  understand  would  be  just  as  dangerous  as  speculating  in 
Wall  Street. 

28.  It  is  safe  to  say,  however,  that  one  can  do  more  business 
in  the  market  with  less  capital  than  any  other  place,  not  because 
-less  money  is  involved  but    because  he  needs  to  advance  only 
enough  capital  to  cover  possible  fluctuations  in  prices,  the  balance 
or  market  value  being  taken  care  of  by  the  broker  with  whom  the 
deal  is  made. 

29.  In  buying  or  selling  stocks  on  margin  the  actual  transfer 
or  delivery  of  shares  does  not  take  place.     All  that  is  necessary  is 
•to  adjust  the  difference  between  the    buying  and  selling  price, 
which  is  done  by  the  broker. 

30.  One  great  danger  that  menaces  those  inexperienced  in  such 
matters,  is  falling  into  the  hands  of  irresponsible  brokers,  who 
swindle  them  out  of  their  capital,  to  say  nothing  of  the  possible 
profits ;  hence  the  importance  of  finding  out  who  can  be  trusted 
with  impunity  or  rather  WITH  MONEY. 

31.  If  afoot  entrusts  his  money  with  a  knave,  to  be  invested 
according  to  the  latter' s  judgment,  he  will  surely  lose  and  the 
knave  just  as  surely  win.      When  fools  renounce  their  folly  knaves 
will  be  without  occupation. 

32.  The  greatest  leader  Wall  Street  ever  knew,  whose  skill  in 
juggling  with  millions  was  without  a  parallel,  now  gone  to  his 


WALL  STREET  METHODS.  307 

reward,  once  said  that  one  should  not  speculate  in  stocks  until  he 
had  first  studied  them  for  at  least  three  years.  The  fact  that^he 
entered  Wall  Street  a  comparatively  poor  man,  and  at  his  demise 
he  was  a  multimillionaire,  proves  that  he  was  eminently  capable  of 
giving  good  advice.* 

33.  One  is  supposed  to  learn  during  that  time  how  to  weigh 
conditions ;  also  learn  how  much  stocks  are  worth  and  the  possible 
fluctuations  in  prices. 

34.  When  thus  equipped  with  prerequisites  to  success,  if  con- 
servative and  patient  enough  to  await  opportunities,  it  seems  to  us 
that  one  has  as  good  a  chance  to  make  money  in  speculation  as  he 
would  have  in  any  other  kind  of  business. 

35.  Without  some  risk  there  can  be  no  gain  in  any  advent- 
ure, and  the  place  to  get  money  is  where  it  is  to  be  found  most 
plentifully. 

THE  NEW  YORK  STOCK  EXCHANGE. 

36.  This  is  an  association  of  men  of  great  wealth,  whose  word 
is  good  for  millions  of  dollars,  and  whose  reputation  for  honesty 
and  probity  is  of  highest  order.     It  began  business  in  the  year 
1792,  with  twenty-four  members;  to-day,  the  beginning  of  the 
twentieth  century,  its  membership  is  about  eleven  hundred. 

37.  It  costs  a  small  fortune  to  become  a  member  now,  as  seats 
(memberships)  have  been  sold  for  $76,000  each.     Their  building 
is  situated  on  Broad  Street  near  Wall.    Its  close  proximity  to  the 
latter  accounts  for  the  fact  that  Wall  Street  gets  credit  for,  or  is 
charged  with,  everything  good  or  bad  that  results  from  speculating 
in  stocks.     Business  begins  at  10  A.M.  and  closes  at  3  P.M.     Sat- 
urdays it  closes  at   12  M.     The  bulk  of  business  is  done  on  this 

*  When  the  ticker  announced  the  last  bid  and  asked,  his  next  thought  was 
of  his  home  on  the  Hudson.  To  see  him  on  his  beautiful  lawn  playing  "  leap 
frog  "  with  his  boys  for  their  amusement,  as  he  often  did,  even  when  his  mind 
was  burdened  with  weighty  matters  involving  hundreds  of  millions  of  dol- 
lars, was  to  look  upon  a  charming  picture  of  home  life  and  domestic  felicity 
that  would  irresistibly  win  the  beholder's  admiration. 


308  WALL  STREET   MATTERS. 

exchange  and  all  the  big  deals  are  consummated  there,  the  smallest 
transaction  involving  not  less  than  one  hundred  shares. 

38.  The  commission  is  one-eighth  for  buying  and  one-eighth 
for  selling;  that  is,  one-quarter  on  each  deal.  The  minimum 
change  in  price  is  also  one-eighth  of  a  point. 


THE   CONSOLIDATED   EXCHANGE. 

39.  This  is  an  independent  and  less  important  association,  that 
has  for  its  clientage  those  who  deal  in  small  lots,  ten  shares  being 
the  minimum,  but  no  limit  to  the  maximum,  although  rarely  ex- 
tending into  a  thousand  shares.     Their  building  is  at  62  Broad- 
way. 

40.  The  commission   is  only  one-eighth  for  completing  each 
deal.     No  less  than  one -eighth  of  a  point  is  offered  or  accepted  as 
a  bid. 

41.  Those  who  can   afford  to   speculate  in  large   lots  would 
rather  pay  the  extra  one-eighth  commission  on  the  big  exchange 
because  of  the  advantage  in  prices. 


ROUTINE   IN  SPECULATING. 

42.  If  one  desires  to  buy  or  sell  twenty  shares  of  the  Granger 
stocks  he  can  do  so  on  five  points  margin — that  is,  he  must  deposit 
$100  with  his  broker;  but  to  deal  in  the  Industrials  or  Tractions 
(city),  it  would  require  from  ten  to  twenty  points  margin,  as  the 
fluctuations  in  prices  are  more  violent  in  these  classes,  often  vary- 
ing five  points  or  more  within  a  few  minutes. 

If  one  chooses  to  BUY  20  shares,  he  fills  out 


WALL  STREET  METHODS.  309 


FORM   ONE. 


New  York 1901 

P.  A.  WRIGHT  &  Co. 

148  WEST  14TH  STREET. 

BUY 

Shares @ 

Stop  loss  @ (Approximate). 

It  is  agreed  that  P.  A.  WRIGHT  &  Co.  have  the  right  to  hypothecate  or  dispose  of,  with- 
out notice  to  the  undersigned,  all  stocks,  bonds,  petroleum, 'grain,  and  cotton,  purchased 
or  sold,  on  margin,  upon  the  approximate  exhaustion  of  margin. 


and  hands  it  to  the  order-clerk,  who  wires  or  telephones  the  order 
to  the  broker  on  the  floor  of  the  Exchange.  When  the  order  has 
been  executed,  the  clerk  hands  the  purchaser  a  pencil  memoran- 
dum like 

FORM  TWO. 


A  MEMORANDUM   ONLY. 


BOUGHT 

Shares 


at. 


and  the  next  day  he  receives  by  mail  an  authenticated  report  of 
the  transaction  like 


310  WALL   STREET   MATTERS. 


FORM  FIVE. 


P.  A.  WRIGHT  &  Co., 

148  WEST  UTH  STREET. 

New  YorTi 1901 

M... 


DEAR  SIR: 

We  have  this  day  BOUGHT  for  your  account  and  risk 


We  have  this  day  SOLD  for  your  account  and  risk 


P.  A.  WRIGHT  &  Co., 


Per. 


It  is  further  understood  that  on  all  marginal  business,  the  right  is  reserved  to  close 
transactions  when  margins  are  within  a  half  per  cent,  of  exhaustion,  without  further 
notice,  and  to  settle  contracts  in  accordance  with  rules  and  customs  of  Exchange  where 
order  is  executed.  P.  A.  WRIGHT  &  Co. 


which  is  a  combination  of  forms  two  and  four. 

If  the  price  declines  three  or  four  points,  more  margin  would  be 
asked  for  in  case  he  desires  to  hold  the  purchase,  otherwise  he  can 
fill  out 


WALL  STREET  METHODS.  311 

FORM   THREE. 


New  York 1901 

P.  A.  WRIGHT  &  Co. 

148  WEST  14TH  STREET. 

SELL 

,  ..Shares. .  @ 


loss  @ (Approximate). 

It  is  agreed  that  P.  A.  WRIGHT  &  Co.  have  the  right  to  hypothecate  and  dispose  of, 
without  notice  to  the  undersigned,  all  stocks,  bonds,  petroleum,  grain  and  cotton,  pur- 
chased or  sold,  on  margin,  upon  the  approximate  exhaustion  of  margin. 


ordering  the  20  shares  sold.     When  the  order  has  been  executed, 
the  clerk  hands  him  a  pencil  memorandum  like 


FORM  FOUR. 


A  MEMORANDUM   ONLY. 


SOLD: 

Shares 


at. 


The  following  day  he  receives  the  authenticated  memorandum  like 
FORM  FIVE.  In  case  the  price  advances  he  is  $20  winner  for  each 
point  above  his  purchasing  price.  When  satisfied  with  the  amount 
of  profit  one  has,  he  fills  out  FORM  THREE  to  sell,  fixing  the  price 
or  at  market  price.  To  be  sure  of  selling,  he  takes  market  price 
as  it  may  not  be  possible  to  get  the  price  he  names,  and  if  a  reac- 
tion sets  in  his  profit  may  soon  melt  away ;  in  fact  he  may  have  to 
take  a  loss  or  produce  more  margin. 


312  WALL   STREET   MATTERS. 

In  case  one  chooses  to  go  short  (sell),  in  the  first  place  he  fills 
out  FORM  THREE  just  the  same  as  selling  long  stock.  If  the  price 
advances  three  or  four  points,  more  margin  would  be  called  for,  as 
he  would  be  $20  loser  for  each  point  advanced.  He  can  put  up 
more  margin  in  case  he  does  not  want  to  take  a  loss,  otherwise  he 
fills  out  FORM  ONE  to  buy,  either  fixing  the  price  or  at  market  price. 

It  is  better  to  deal  at  market  price  if  one's  capital  is  limited, 
for  the  reason  already  assigned,  thereby  limiting  his  loss  or  secur- 
ing his  profit ;  otherwise  he  incurs  the  risk  of  increasing  the  former 
and  diminishing  the  latter. 

If  the  price  declined  after  one  first  sold,  he  would  be  one  dollar 
per  share  winner  for  each  point  declined,  and  when  satisfied  with 
the  amount  of  profit  he  fills  out  FORM  ONE  the  same  as  in  buying 
long  stock. 

Speculators  who  can  furnish  unlimited  margin  can  deal  with 
the  same  degree  of  safety  as  investors,  as  it  would  be  only  a  ques- 
tion of  time  when  prices  would  get  back  to  starting  point,  either 
long  or  short. 

It  seems  to  us  to  be  better  to  take  small  loss  and  get  out  when 
one  sees  he  is  on  the  wrong  side  and  get  in  again  at  a  more  ad- 
vantageous price  than  to  tie  up  his  capital  indefinitely,  awaiting 
return  to  starting  point. 

Those  young  in  the  business,  when  the  market  goes  their  way,  are 
inclined  to  plunge  ;  that  is,  when  they  get  a  profit  they  increase 
their  deal  to  the  extent  of  profit.  The  result  is,  when  the  turning 
point  comes  and  the  market  goes  against  them,  they  lose  twice  as 
fast  as  they  won. 

A  better  way  would  be  to  reduce  the  amount  of  deal  in  case  of 
profit,  then  when  the  turn  comes  one  loses  less  and  can  get  out 
with  some  profit.  If  he  starts  with  all  he  can  carry  and  it  goes 
his  way,  he  gets  all  there  is  in  it  for  him;  but  if  it  goes  against 
him,  he  can  close  out  half  at  a  small  loss  and  hold  the  other  half. 
The  margin  will  protect  half  twice  as  far  as  the  whole,  or  until 
the  remaining  half  recovers  its  own  loss;  also,  possibly  the  loss 
on  the  half  sold,  by  going  the  right  way  beyond  the  starting  point. 


WALL   STREET   METHODS.  313 

Those  who  have  plenty  of  capital  pursue  the  opposite  course ;  that 
is,  if  they  buy,  say,  20  shares  and  the  price  declines  two  points  they 
buy  20  shares  more,  which  makes  their  average  one  point  lower 
than  first  purchasing  price.  Then,  when  there  is  a  rally  of  one 
point  in  the  price  they  close  out  the  40  shares  without  a  loss, 
except  the  incidental  expenses  attending  both  deals.  The  more 
they  buy  on  this  scale  the  lower  would  be  the  average  price,  re- 
quiring less  rally  for  them  to  get  out  whole. 

If  the  conditions  favor  either  a  protracted  Bull  or  Bear  market 
it  is  not  a  bad  idea  to  pyramid  or  parlay,  as  it  is  called,  which 
amounts  to  the  same  thing  as  plunging,  but  as  the  profits  in- 
crease invest  only  half  of  it  instead  of  all,  thus  compounding  the 
gain  in  case  it  continues  in  the  right  direction,  or  saving  part  of 
the  gain  in  case  it  goes  wrong.  It  is  by  this  method  of  trading 
that  small  fortunes  are  made  on  limited  capital  in  a  short  time, 
when  it  was  possible  to  lose  only  the  margin. 

STATEMENTS. 

On  page  315  we  give  two  different  forms  of  statements.  No.  1 
will  bear  investigation  in  the  matter  of  interest.  No  broker  has  any 
right  to  charge  interest  on  more  money  than  he  advances.  In  this 
case  interest  was  charged  on  total  cost  of  40  shares  of  stock, 
$2,580,  when  it  should  have  been  on  $2,380,  as  the  margin,  $200, 
covered  part  of  the  cost.  This  is  a  big  percentage  in  the  brokers' 
favor,  and  the  interest  alone  would  soon  enrich  him  if  he  had  cus- 
tomers enough  who  would  submit  to  that  kind  of  figuring. 

The  first  two  items  on  credit  side  of  statement  ($200)  were  for 
margin.  The  first  item  on  debit  side  was  20  shares  L.  &  N  (Louis- 
ville and  Nashville)  bought  @  86$  =  $1,737.50,  add  com.  •§•  = 
$2.50,  extension  $1,740.  In  each  case  it  will  be  noticed  that  the 
extension  covers  $1.25  com.  for  each  10  shares.  The  second  debit 
item  was  20  shares  Co.  T.  (Continental  Tobacco)  bought  @  41$. 
Next  item  was  interest  for  carrying  the  40  shares  over  Sunday, 
and  the  last  item  on  that  side  was  10  shares  P.  0.  (People's  Gas 
Light  Company  of  Chicago)  bought  @  115J. 


314  WALL   STREET   MATTERS. 

The  third  item  on  credit  side  were  \\%  quarterly  dividend  on 
10  shares  P.  0.,  declared  while  the  customer  still  held  them. 
The  other  three  items  on  that  side  were  for  the  50  shares  sold  at 
the  prices  indicated,  hence  a  net  loss  on  the  whole  of  $106.77.  It 
will  be  noticed  that  the  first  extension  on  the  credit  side  is  20 
cents  less  than  it  figures,  and  the  other  two  40  cents  each  less — 
which  is  the  charge  for  revenue  stamps  (20  cents  is  deducted  for 
each  ten  shares). 

In  statement  No.  2  it  will  be  noticed  that  interest  is  credited 
on  the  margin  advanced,  also  on  sales,  and  the  balance  of  interest, 
29  cents,  adjusted  properly,  or  35  cents  more  in  the  customer's 
favor  than  would  have  been  accounted  for  by  the  broker  who  ren- 
ders statement  like  form  No.  1. 

FORM   OF  A  PUT. 


For  value  received  the  bearer  may  DELIVER  TO  ME  on  one 
day's   notice,  except  last  day  when   notice  is  not  required, 

.shares  of  the (common  or  preferred)  stock 

of  the company,  at any  time, 

within days  from  date. 

All  dividends  for  which  Transfer  Books  close  during  said 

time  go  with  the  stock.     Expires 190  . 

.  .  .  .  M.  (time  of  day  on  this  line)  Signed 


Dec.  31, 1900,  Atchison  Preferred  was  selling  at  89.  "A"  is  a 
broker  who  does  not  believe  the  price*  of  this  stock  will  be  lower 
than  86  within  15  days,  hence  is  willing  to  sell  for  $85  all  the 
profit  that  can  be  made  on  100  shares  below  86  within  the  speci- 
fied time.  "B"  buys  the  privilege,  paying  "A"  $85  for  it.  All 
he  can  lose  is  the  $85,  no  difference  how  high  the  stock  goes  be- 
fore the  time  expires,  but  his  profit  will  be  $100  for  each  point 
below  86  within  the  15  days.  He  can  put  the  100  shares  any 
time  below  86  at  market  price,  when  he  is  satisfied  with  the 


WALL  STREET   METHODS. 

*        -    4 


PH 


H 
C 

1-5 

rfS 


COCO        IH^H 


8888888 


315 


1 


:  :H  HJ  i  |o 
•  :«s  «s^| 
1  «  H^3| 
3  SSSSSw 


H  _; 

tfi  d3 


pq     ^p,,j^. 

OOOOO^; 

grrrrr, 


316  WALL   STREET   MATTERS. 

amount  of  profit.     If  he  fails  to  put  it  within  the  limited  time, 
he  loses  all. 

Say  the  price,  after  ten  days,  is  80,  he  can  put  it  without  wait- 
ing the  other  5  days,  as  his  profit  at  80  would  be  $500,  less  $85, 
which  he  paid  for  the  privilege.  Within  the  remaining  five  days 
the  price  may  advance  again  and  all  his  profit  would  melt  away 
unless  he  delivers  the  100  shares  below  86. 

FORM   OF   A   CALL. 


For   value  received  the  bearer  may  CALL  ON   ME  on  one 
day's  notice,  except  last  day,  when  notice  is  not  required, 

shares  of  the (common  or  preferred)  stock 

of  the company,  at any  time, 

within days  from  date. 

All  dividends  for  which  transfer  books  close  during  said 

time  go  with  the  stock.     Expires 190  . 

.  .  .  .  M.  Signed 


When  St.  Paul  was  selling  at  125,  a  broker  sold  a  call  for  $5 
on  100  shares  at  137,  good  for  30  days,  believing  it  was  not 
within  the  bounds  of  a  reasonable  possibility  for  that  stock  to 
advance  12  points  in  30  days,  or  higher  than  it  had  ever  sold 
before.  Before  the  expiration  of  the  time  the  price  was  149,  or 
12  points  higher  than  the  call  price.  The  purchaser  of  the  call 
made  $1,200  for  his  $5.  All  he  stood  to  lose  was  his  invest- 
ment. The  price  of  St.  Paul  had  to  advance  over  12  points  to 
save  his  $5.  To  the  maker  of  the  call  it  looked  like  finding  a  five- 
dollar  bill.  The  price  continued  to  advance  in  this  movement 
until  it  reached  162,  without  a  reaction  of  any  consequence.  In  a 
short  time  afterward  it  advanced  to  185.  We  have  often  heard  it 
said  in  silly  rhyme,  and  have  repeatedly  seen  it  demonstrated  in 
distressing  reality,  that, 

"  We  can  never  tell  from  where  we  sit 
How  soon  our  money  will  '  git  up  and  git. '  " 


WALL    STREET   METHODS.  317 

WAYS   THAT   ARE   DARK. 

It  is  a  common  belief  that  the  regular  commission  is  not  the 
only  source  of  gain  of  unscrupulous  brokers  on  the  Small  Ex- 
changes ;  in  fact,  it  is  believed  to  be  the  smallest  part  of  their  profit 
in  a  very  active  market.  Our  experience  leaves  no  room  for  doubt 
in  our  mind  that  such  is  the  case  with  some  of  those  who  handle 
the  accounts  of  small  speculators. 

That  which  now  concerns  us  is  what  disposition  is  made  on  the 
books  of  the  extra  rake  off  or  undue  profit  in  this  hypothetical 
case,  otherwise  we  would  not  allude  to  ways  that  are  dark  and 
tricks  peculiar  to  the  unscrupulous.  One  way  to  cover  such  trans- 
actions would  be  a  dummy  account,  that  is,  an  imaginary  customer 
represented  by  a  fictitious  name,  or  possibly  the  name  of  a  clerk 
to  make  it  appear  more  realistic  and  on  the  level,  also  easier  to 
explain  in  case  of  an  investigation. 

Say  a  customer  gives  an  order  to  buy  40  shares  of  Sugar  at  the 
market  price,  which  he  observes  by  the  tape  is  135.  The  order  is 
executed  promptly  at  135,  but  before  reporting  the  purchase,  the 
broker  waits  to  see  next  quotation,  and  if  it  is  lower,  the  customer 
gets  the  Sugar  at  the  actual  purchasing  price,  135,  and  is  of  course, 
a  loser;  if,  however,  the  next  quotation  to  135  is  a  fraction  higher, 
the  broker  still  ivaits  to  see  a  few  more  quotations ;  as  to  how  long 
he  waits  will  depend  upon  whether  he  is  dealing  with  an  easy  cus- 
tomer or  a  kicker. 

By  an  easy  customer  we  mean  one  inexperienced  in  the  busi- 
ness, who  believes  that  everything  is  on  the  level,  usually  called 
a  lamb. 

A  kicker  is  one  who  knows  the  tricks  of  the  trade.  He  de- 
mands immediate  action,  and  will  not  submit  to  being  gouged  for 
more  than  a  quarter  of  a  point,  whereas  an  easy  customer  usually 
abides  the  broker's  pleasure  and  may  get  a  point  or  more  the  worst 
of  it. 

Say  the  price  of  Sugar  advances  to  140,  and  the  movement 
seems  to  be  over,  the  broker  reports  to  easy  customer  40  shares  of 


318 


WALL   STREET   MATTERS. 


Sugar  bought  at  136.  As  he  has  no  way  of  knowing  the  price  at 
which  the  Sugar  was  bought,  and  the  fact  that  he  has  a  profit  of 
four  points,  makes  the  deal  very  satisfactory  and  allays  all  sus- 
picion as  to  being  charged  one  point  higher  than  the  market  price 
when  he  gave  the  order  to  buy,  which  gives  the  dummy  one  point 
clear  profit. 

The  dummy  would  be  charged  with  40  shares  of  Sugar  at  135, 
and  credited  at  136,  the  price  charged  the  customer,  apparently 
making  two  deals  of  it.  Double  dealing  of  this  kind  is  a  ruinous 
percentage  against  speculators,  and  is  probably  one  of  the  principal 
reasons  why  the  public  cannot  beat  the  game.  The  clerk  must  be 
wide  awake  and  quick  to  discern  as  to  an  easy  customer  and  a 
kicker,  so  as  to  avoid  controversies  and  expose  of  little  irregulari- 
ties of  this  kind.  Do  not  do  business  with  unscrupulous  brokers. 


A   FORTUNE-TELLER- THE  TICKER. 


STOCK  BROKERS'  BOOKS. 

It  is  now  in  evidence  that  the  books  used  in  a  broker's  office 
are  altogether  different  in  design  from  those  used  in  other  lines  of 
business ;  hence,  even  though  one  may  have  spent  half  of  his  life- 
time handling  the  books  hi  all  other  branches,  he  could  not  suc- 
cessfully manage  a  broker's  books  without  the  technical  knowledge 
contained  in  these  pages. 

The  following  forms  are  those  used  by  New  York  Stock  Ex- 
change houses.  We  believe  in  meeting  the  issue  squarely  and 
weighing  facts  as  we  find  them,  but  if  we  were  put  in  charge  of 
the  books  in  a  broker's  office  we  would  introduce  what  we  conceive 
to  be  the  indispensable  Cash  Book,  which  would  conserve  its  part 
just  as  advantageously  in  this  business  as  it  would  in  any  other 
kind,  at  the  same  time  not  disturb  the  usual  routine. 

We  find  the  ordinary  Ledger,  Check  Book  and  Journal.  The 
special  books  are  BLOTTEK,  PURCHASE  AND  SALES,  LONG  AND 
SHORT,  MARGIN,  BORROWED  AND  LOANED,  CASH  LOANS,  SECURI- 
TIES, STOCK  LOANS,  DIVIDEND  and  COUPON. 

The  Blotter  is  a  general  summary  of  each  day's  transactions 
and  includes  the  cash.  It  is  the  main  'book.  The  others  are  used 
for  the  purposes  indicated  by  their  titles. 

Assume  that  P.  A.  WRIGHT  &  Co.  (T.  P.  NOBLE  being  the 
"Co.")  begin  business  as  stock  brokers  Oct.  1,  1901.  The  profit 
or  loss  to  be  divided  equally.  NOBLE  invests  in  cash  (represented 
by  check  on  his  private  bank)  $10,947.16.  WRIGHT  invests  500 
shares  So.  Eailway  Com.,  400  shares  N.  Y.  Central,  10,000  Bonds 
(U.  S.  Gov.  4's). 

1st  entry  is  made  on  the  "  Deliver "  side  of  Blotter  crediting 
NOBLE  with  his  check. 


320  STOCK    BROKERS'    BOOKS. 

2d  entry  is  on  back  of  stub  of  Check  Book,  charging  UNION 
BANK  with  the  check  $10,947.16. 

3d  entry  appears  on  the  "  Receive  "  side  of  Blotter,  noting  se- 
curities invested  by  WRIGHT  without  regard  to  prices  or  extensions. 

4th  entry  on  same  side  of  Blotter  shows  securities  deposited 
with  us  by  SMITH  as  margin,  also  without  regard  to  what  they  are 
worth.  See  Blotter  on  page  327.  The  top  of  page  represents  the 
"  deceive  "  (or  left-hand)  side  and  the  bottom  of  page  represents 
the  "  Deliver  "  (or  right-hand)  side  of  Blotter.  This  gives  rise  to  a 
Capital  account  on  the  Ledger  which  is  credited  $10,947.16  and 
Debited  (prices  and  extensions  blank)  with  the  Securities  belong- 
ing to  the  firm.  SMITH'S  ledger  account  would  be  debited  in 
blank  the  same  way  with  his  securities.  The  Bank  Ledger  account 
would  be  debited  with  $10,947.16.  As  a  matter  of  fact  this  is 
the  usual  way  it  is  done,  and  we  are  assured  has  been  in  vogue  for 
twenty  years.  It  is  positively  wrong  in  principle,  nevertheless,  to 
debit  a  man's  account  with  what  he  has,  and  if  left  to  our  judg- 
ment in  opening  the  books  we  would  not  follow  the  prevailing 
custom,  but  we  would  introduce  a  way  which  seems  to  be  un- 
known in  this  business,  although  in  perfect  harmony  with  the 
laws  that  govern  the  science  of  accounts. 

We  would  show  the  market  price  and  extension  for  each  of  the 
Securities  that  appear  on  the  "Keceive"  side  of  the  Blotter,  the 
total  amount  of  which  we  would  charge  to  Securities  account  in 
the  Ledger  and  so  name  it  in  the  space  designed  for  that  purpose 
in  the  Blotter.  Then  on  the  "  Deliver  "  side  of  the  Blotter  we 
would  credit  WRIGHT  with  the  amount  of  his  part  of  the  securi- 
ties, and  credit  SMITH  in  the  same  way  with  the  amount  of  his  as 
shown  on  the  "  Eeceive  "  side.  We  would  credit  NOBLE  in  the 
Ledger  with  $10,947.16,  and  have  no  Ledger  account  called  Capital 
Account. 

This  would  not  change  the  present  order  of  things  that  are  gov- 
erned by  the  rule  that  all  stocks  coming  in  are  long  and  those 
going  out  are  short.  The  fact  of  making  extensions  of  those  on 
the  "  Eeceive "  side  and  crediting  the  owners  thereof  with  the 


STOCK  BROKERS'  BOOKS.  321 

amount  does  not  make  the  stocks  short,  no  more  so  than  when  we 
extended  the  St.  Paul  and  U.  S.  Steel,  which  we  bought  for  JONES 
and  SMITH. 

However,  we  give  the  forms  of  the  usual  way,  and  not,  as  in 
our  judgment,  would  be  the  correct  and  better  way. 

DAILY   ROUTINE. 

1st.  Enter  the  purchases  and  sales  in  the  PURCHASE  and  SALES 
BOOK. 

2d.  Write  up  LONG  and  SHORT  book. 

3d.  Write  up  BLOTTER  from  PURCHASE  and  SALES  BOOK. 

4th.  Make  Clearing  House  Sheet  from  the  exchanged  tickets 
so  it  will  agree  with  the  BLOTTER. 

5th.  Plan  out  the  day's  work,  that  is,  make  out  a  list  of  stocks 
to  be  borrowed,  loaned,  or  returned,  and  send  it  with  Stock  Loan 
book  to  exchange  member  for  proper  attention;  borrow  money,  if 
necessary,  to  meet  the  requirements  of  the  day,  or  pay  off  loans 
if  funds  are  sufficient  to  do  so  and  still  have  usual  balance  in 
Bank. 

6th.  Write  up  SECURITIES  BOOK. 

7th.  Turn  the  BLOTTER  over  to  the  bookkeeper  so  he  can  make 
his  extensions,  i.e.,  commissions  and  total  amounts,  after  which 
he  posts  the  work  of  the  day. 

PURCHASE  AND  SALES  BOOK. 

The  size  of  this  book  is  8  x  12  and  contains  200  pages  or  more. 
It  is  a  double  page  book,  purchases  on  page  2  and  sales  on  page  3. 

1st  entry  is  100  shares  of  St.  Paul  bought  from  KRUSE  &  Co. 
@  156^  for  JONES.  No  extension  necessary  in  this  book. 

2d  entry  is  50  shares  Union  Pacific,  bought  from  VERMILLE 
&  Co.,  @  97  for  BROWN. 

3d  entry  is  500  shares  U.  S.  Steel,  bought  from  FLOHR  & 
Co.,  @  53  J  for  SMITH. 

4th  entry  is  100  shares  Pacific  Mail,  sold  to  PORTER  &  Co., 


STOCK  BROKERS'  BOOKS. 


@  42-J  for  ADAMS.  This  order  was  executed  for  us  by  another 
broker  (MILLER),  whose  name  appears  on  the  left,  for  which  he 
gets  $2.00,  that  being  the  regular  rate  ($2.00  per  100  shares) 
brokers  charge  one  another.  Miller  would  send  in  his  bill  at  the 
end  of  the  month,  which  we  would  pay  and  charge  to  Commis- 
sion account. 

BOUGHT,   Oct.  2d,  1901. 


Broker. 

No.  Shares. 

Stock. 

From 

Price. 

Account. 

100 
50 
500 

St  Paul 

Kruse 

156M 
97 
53^ 

Jones. 
Brown. 

Smith. 

Un.  Pacific  .  .  . 

Vermille.  .  . 

U.  S.  Steel  

Flohr  

SOLD,   Oct.  8d,  1901. 


Broke 

r. 

No.  Shares. 

Stock. 

To 

Price. 

Account. 

Miller... 

100 

Pacific  Mail  

Porter  

43^ 

Adams. 

i 

LONG  AND   SHORT   BOOK. 

This  book  is  uniform  in  size  with  PURCHASE  and  SALES,  but  of 
different  design.  The  entries  are  made  with  lead  pencil  because 
they  are  subject  to  many  changes.  The  first  half  of  this  book  is  for 
the  stocks  most  popular  with  and  dealt  in  by  our  customers,  alpha- 
betically arranged  with  several  pages  for  each  stock.  On  the  left 
side  of  the  dividing  line,  on  St.  Paul  page,  is  entered  "100 
Jones,"  that  being  the  number  of  shares  bought  for  his  account, 
which  also  explains  the  entries  on  pages  for  Union  Pacific  and 
U.  S.  Steel. 

On  the  right  of  the  dividing  line,  on  page  for  Pacific  Mail,  is 
entered  "100  Adams,"  that  being  the  number  of  shares  sold  for 
his  account.  When  these  deals  are  all  closed  by  selling  the  long 
stock  and  covering  the  short,  the  entries  are  erased. 

In  the  other  half  of  this  book,  on  page  indexed  "A"  we  find 


STOCK  BROKERS'  BOOKS. 


323 


ADAMS  on  the  right  of  the  dividing  line  is  entered  "100  JPacific 
Mail,"  being  the  sale  made  for  his  account.  Any  other  sales  made 
for  him  would  be  entered  immediately  under  on  the  next  line  or 
lines. 

On  page  indexed  "S"  we  find  SMITH,  and  on  the  left  of  the 
dividing  line  is  entered  "500  U.  S.  Steel,"  being  the  number  of 
shares  of  that  stock  bought  for  his  account.  Any  other  purchases 
made  for  him  would  follow  in  regular  order  under  first  entry, 
which  will  also  explain  entries  on  pages  indexed  "  B  "  and  "  J. " 
As  to  how  many  pages  would  be  left  for  each  Customer  will  de- 
pend upon  whether  he  is  an  active  operator  or  an  occasional 
dealer.  When  the  deals  are  closed  out  for  either  stock,  the  entry 
is  erased  for  that  particular  stock,  and  those  not  erased  on  the  left 
would  show  long  stocks  still  held,  and  on  the  right  it  would  show 
the  shorts  still  out. 

A 
ADAMS. 

100  Pacific  Mail. 


BROWN. 


50  Un.  Pacific. 


JONES. 


100  St.  Paul. 


8 


SMITH. 


500  U.  S.  Steel. 


324  STOCK  BROKERS'  BOOKS. 

LONG  AND   SHORT    BOOK.— (CONTINUED.) 

PACIFIC  MAIL. 

100  Adams. 


100  Jones. 


50  Brown. 


500  Smith. 


ST.  PAUL. 


UNION  PACIFIC. 


U.  S.  STEEL. 


BLOTTER. 

This  is  a  general  summary  of  each  day's  business,  and  is  the 
all-important  book  of  the  specials.  It  contains  300  pages,  14  x 
17,  nearly  square  in  dimensions.  Two  are  required,  one  for  Mon- 
days, Wednesdays,  and  Fridays,  the  other  for  the  alternate  days, 
so  that  the  bookkeeper  can  use  one  while  the  other  is  in  use  by 
the  Cashier. 

1st  entry  Oct.  2,  1901,  is  on  the  right,  or  "To  Deliver"  side, 
and  shows  balance  in  Union  Bank. 

2d  and  3d,  on  same  side,  are  for  checks  received  as  margin 
from  JONES  and  BROWN. 

4th  is  on  the  left,  or  "Receive"  side,  and  is  for  100  shares  of 
St.  Paul,  bought  from  KRUSE,  @  156J  =  $15,625,  for  JONES. 
This  part  of  the  entry  is  made  by  the  Cashier,  and  the  balance  is 
made  later  by  the  bookkeeper. 

5th,  on  the  same  side,  is  500  shares  U.  S.  Steel,  bought  from 
FLOHR,  @  53£  =  $26,750,  for  SMITH. 

6th  is  on  the  right  and  is  for  100  shares  of  Pacific  Mail  sold 
to  PORTER  @  42-J  =  $4,212.50,  for  ADAMS.  This  part  of  entry 
only  is  made  by  Cashier,  the  balance  is  made  later  by  Bookkeeper. 
As  we  did  not  have  the  100  Pacific  Mail,  we  borrowed  it  of 
SELIG,  @  43  =  $4,300,  which  required 


STOCK  BROKERS'  BOOKS.  325 

7th  entry  on  the  left,  and  is  posted  later  at  the  debit  of  Bor- 
rowed and  Loan  account. 

As  a  matter  of  courtesy  we  executed  ADAMS'  order  before  we 
received  his  margin.  If  it  was  not  forthcoming  the  following  day, 
we  would  call  for  it  in  short  order,  although  we  know  him  to  be 
good  for  his  contracts.  If  he  failed  to  respond  promptly,  we  would 
close  out  the  deal  at  once  for  self-protection  and  hold  him  for  the 
difference.  Brokers  have  great  respect  for  nature's  first  law — self- 
preservation  or  self-interest. 

8th  entry  is  made  in  the  Borrowed  and  Loan  book  and  ex- 
plains itself. 

9th  is  on  the  left  side  of  the  Blotter,  and  is  for  50  shares  of 
Union  Pacific,  bought  from  VERMILLE  &  Co.  @  97  =  $4,850,  for 
BROWN. 

At  this  stage  of  the  day's  work  the  Cashier  begins  to  size  up  the 
situation,  to  see  if  he  will  have  ample  means  to  meet  his  obliga- 
tions. The  firm's  commitments  amount  to  $51,525.  See  footing 
of  amount  column  on  the  "Receive  "  side  ;  and  all  there  is  in  sight 
to  take  care  of  them  is  $15,959.66.  See  footing  of  amount  col- 
umn on  the  "  Deliver  "  Side. 

It  becomes  necessary,  therefore,  to  borrow  enough  money  to 
cover  the  deficiency  and  still  maintain  the  average  balance  in 
Bank ;  hence  he  negotiates  a  loan  with  THE  POWHATTAN  TRUST 
Co.  for  $45,000  @  5$,  which  requires 

10th  entry,  and  is  on  the  "Deliver"  side,  and  the  llth  entry, 
which  appears  in  the  Cash-Loans  book.  He  makes  his  Deposit. 
See  stub  of  check  book.  He  then  balances  and  closes  his  part  of 
the  Blotter  for  the  day  and  turns  it  over  to  the  bookkeeper,  who 
calculates  the  commission  and  makes  the  extension  into  the  Total 
Amount  column  on  both  sides.  He  aggregates  the  commission  on 
both  sides,  making  $93.75,  and  the  Kevenue  stamps  $2.00,  which 
he  enters  on  the  "Deliver"  side  in  the  Total  Amount  column, 
then  balances  and  closes  his  part  of  the  Blotter.  The  extension 
in  commission  column,  $14.50  on  the  "Deliver"  side,  includes 
$2.00  Revenue,  which  in  summarizing  appears  separately.  His 


326  STOCK  BROKERS'  BOOKS. 

balance  must  agree  with  the  Cashier's  balance.  He  then  posts 
the  work  of  the  day.  The  entries  in  Total  Amount  column  on 
the  "Deliver  "  side  are  carried  to  the  credit  side  of  the  Ledger  ac- 
counts named  in  the  Account  space  on  that  side,  and  those  on  the 
"  Receive  "  side  are  carried  to  the  debit  side  of  the  Ledger  accounts 
named  in  the  similar  space  on  that  side  of  the  Blotter. 

Before  the  Cashier  turns  the  Blotter  over  to  the  bookkeeper, 
however,  he  makes  an  abstract  from  Blotter  which  he  compares 
with  the  Clearing  House  Sheet,  and  which  must  agree  with  it; 
hence  is  a  check  on  the  correctness  of  the  latter,  which  is  made 
by  a  junior  clerk. 

As  the  abbreviations  for  some  of  the  stocks  are  very  much  alike 
when  carelessly  written,  a  small  rubber  stamp  is  required  by  the 
Clearing  House  to  be  used  for  certain  stocks  on  the  clearing  sheet. 

The  necessity  for  this  great  precaution  is  due  to  the  fact  that 
the  Clearing  House  authorities  impose  a  fine  of  $5.00  for  each  and 
every  error  in  the  sheet. 

The  50  shares  of  Union  Pacific  does  not  appear  on  the  Clearing 
sheet  owing  to  the  fact  that  the  Clearing  House  does  not  recognize 
deals  for  less  than  100  shares.  On  both  sides  of  Blotter  we  notice 
P.  0.  (Paired  Off),  which  signifies  that  the  100  Pacific  Mail  is  a 
stand  off  as  far  as  delivery  is  concerned. 


STOCK  BECKERS'  BOOKS. 


327 


O 

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S  I  S 


Numbers. 

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To  Whom  Sold. 

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328 


STOCK  BROKERS'  BOOKS. 


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S    JSS 


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STOCK  BROKERS'  BOOKS.  329 

After  business  closes  on  the  Exchange,  our  clerk  fills  out  the 
Deliver  tickets  which  the  Clearing  House  furnishes  in  blank  form, 
3X7,  printed  in  red  ink,  like 

EXHIBIT  A. 


NQ     39  New  York 190.. 

CLEARING-HOUSE  OF  THE  (E^™)  EXCHANGE, 
DELIVER  TO.. 


share*., 

for  account  of  the  undersigned. 


which  he  delivers  to  the  brokers  who  bought  stock  of  us  during 
the  day,  and  receives  in  exchange  a  Eeceive  ticket,  which  is  also 
furnished  by  Clearing  House,  in  blank  form,  3x7  canary-colored 
paper,  black  print,  like 

EXHIBIT   B. 


NO     39  New  Forfc, 190. 

CLEARING-HOUSE  OF  THE  (ExcK)  EXCHANGE, 

RECEIVE    FROM 

shares @ § 

for  account  of  the  undersigned. 


The  reason  for  having  different  colors  is  to  identify  quickly  and 
facilitate  assorting  the  matter. 

The  seller  is  the  one  who  effects  the  exchange  of  tickets.  The 
time  for  delivery  of  stocks  is  2 : 15  P.M.  sharp.  In  case  one  fails 
to  be  on  time,  and  others  cannot  deliver  for  him,  we  have  the 
right  to  buy  the  stocks  of  another  broker  and  hold  the  delinquent 
broker  for  the  difference. 

As  a  matter  of  fact  we  did  not  receive  from  KRUSE  &  Co.  the 


330 


STOCK  BROKERS'  BOOKS. 


100  St.  Paul  bought  of  them,  nor  did  we  receive  the  500  Steel 
bought  of  FLOHR  &  Co.  direct  from  them,  but  we  were  informed 
by  the  Clearing  House  that  KUNE,  Low  &  Co.  would  deliver  the 
former  and  VAN  SLACK  &  Co.  would  deliver  the  latter,  which  facts 
are  noted  on  the  Blotter  in  the  space  headed  "Number  "  which 
would  also  show  the  number  of  the  certificates. 

It  is  obvious,  therefore,  that  we  do  not  necessarily  receive  from 
those  from  whom  we  buy,  as  the  Clearing  House  people  can  match 
the  orders  to  suit  their  own  convenience,  it  being  immaterial  to 
us  who  delivers  the  stocks  so  long  as  we  get  them ;  but  if  it  came 
to  an  issue  of  demanding  the  stocks,  we  hold  the  brokers  from 
whom  we  bought,  as  in  the  case  of  a  stock  that  is  Cornered. 

The  Clearing  Sheet  must  be  made  at  the  price  established  by 
the  Clearing  House  (in  whole  numbers)  at  the  close  of  the  day, 
which  the  tape  indicates  following  last  bid  and  asked  and  high 

and  low. 

EXHIBIT   C. 

This  is  the  form  of  ticket  we  fill  out  for  stocks  to  be  received 
from  others  than  those  from  whom  we  bought.  This  form  is  fur- 
nished by  the  Clearing  House  and  is  the  only  kind  brokers  are 
permitted  to  use.  It  is  3^  X  5^  canary-colored  paper,  black  print. 


CLEARING-HOUSE  OF  THE  (&M.)  EXCHANGE. 

THE  UNDERSIGNED 

WILL    nLUhlVL    FOLLOWING    DnLANllL    OF  STOCK  AT 
THE  DELIVERY  PRICE. 

SHARES. 

STOCKS. 

RECEIVE  FROM 

100 

St.  P. 
@  157 

Kune,  Low  &  Co. 

DATE 
Oct.  «,  1901.               NAME       P.  A.  WRIGHT  &  CO.                                         No  39 

STOCK  BROKERS'  BOOKS. 


331 


EXHIBIT   D. 


In  case  we  have  to  deliver  stocks  we  would  fill  out  form,  3-^  X 
5£,  red  print,  like  this,  which  is  also  furnished  by  the  Clearing 
House. 


CLEARING-HOUSE  OF  THE  (^g&V  EXCHANGE. 

THE  UNDERSIGNED 

WILL    UhLlvLn     FOLLOWING     BALnNlt.    OF  STOCK  AT 
THE  DELIVERY  PRICE. 

SHARES. 

STOCK. 

DELIVER  TO 

DATE 
NAME  ..                                                NO 

EXHIBIT   E. 


This  is  the  form  of  draft  (usually  tinted  paper,  to  guard  against 
erasures;  size,  3  X  8-J-)  we  make  on  the  POWHATTAN  Co.,  which 
we  assume  is  the  Clearing  House's  depository,  for  balance  due  us 
according  to  Clearing  Sheet. 


W»   3!>                           tf<>™   Y»rk      0cL2              1^01 

Clearing  -House 
of  the 
(Name)  Exchange 
Approved. 

^otoJjattan  Company 

Pay  to  the  order  of  the  undersigned 
Two  hundred  and  thirty  -seven  —                     J)nljnf9 

as  advised  this  day  by  the  Clearing-House  of  the  (Name)  Exchange. 

Manager. 

$23750_                              p,  A.    WRIGHT  &  CO. 

332  STOCK  BROKERS'  BOOKS. 


CLEARING   HOUSE   SHEET. 

These  sheets  are  furnished  by  the  Clearing  House  in  blank  form 
like  the  following.  The  Clearing  House  assigns  a  number  to  each 
patron.  Our  number,  being  39,  appears  on  this  sheet,  also  on 
other  forms  and  books  as  will  be  noticed. 

The  price  of  St.  Paul  156J  and  U.  S.  Steel  53£  on  the  Receive 
side  of  Clearing  Sheet  is  the  price  at  which  we  bought  in  each 
case,  and  on  the  Deliver  side  the  price  of  the  former  is  157  and 
of  the  latter  54,  which  is  the  Clearing  prices  for  each. 

On  the  Deliver  side  of  Sheet  the  price  of  Pacific  Mail  is  42-J-,  at 
which  we  sold  100  shares,  but  it  advanced  during  the  day  and 
closed  at  43,  which  coincides  with  the  Clearing  House  price  and 
appears  on  the  Receive  side  for  the  100  shares.  This  form  is  also 
furnished  by  Clearing  House. 

A  copy  of  each  of  the  foregoing  Exhibits  (A,  B,  C,  and  E)  must 
be  attached  to  Clearing  Sheet  before  submitting  it.  Two  tickets 
like  Exhibit  C  are  required  in  this  case,  as  we  are  to  receive  two 
lots  of  stocks.  We  had  no  stocks  to  deliver  on  this  date,  hence 
no  ticket  D  would  be  attached. 

The  business  of  one  day  is  cleared  on  the  following  day. 


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STOCK  BROKERS'  BOOKS. 

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334  STOCK  BROKERS'  BOOKS. 

BORROWED   AND   LOANED   BOOK. 

This  is  also  a  double -page  book  uniform  in  size  with  the  others. 
On  the  left,  or  page  2,  "Borrowing,"  and  on  the  right,  or  page  3, 
"Loaning." 

BORROWING. 


Date. 

No.  of  Shares. 

Stock. 

Rate. 

Price. 

Amount. 

Returned. 

1901. 
Oct. 

2 

100 

Pacific  Mail 

3£ 

$43 

$4,300 

00 

LOANING. 


Date. 

No.  of  Shares. 

Stock. 

Rate. 

Price. 

Amount. 

Returned. 

CASH  LOANS  BOOK. 

This  book  is  also  uniform  in  size  with  the  others  and  contains 
250  pages  or  more.  The  page  is  headed  with  the  name  of  the 
company  from  whom  we  borrow,  the  amount  borrowed  and  the  rate 
of  interest.  The  date  on  the  extreme  left,  beneath  follows  the 
number  of  shares  of  each  stock  hypothecated  or  put  up  as  security, 
also  the  number  of  each  certificate. 

Oct.  2,  1901.         Powhattan  Trust  Co.,  5$,  $45,000. 
100  St.  Paul  (Numbers). 
500  Steel  (Numbers). 
50  Union  Pacific  (Numbers). 
300  So.  Railway  (Numbers) . 

SECURITIES   BOOK. 

This  book  is  also  uniform  in  size  with  the  others  and  needs  to 
have  only  about  100  pages. 


STOCK  BROKERS'  BOOKS. 


335 


At  the  close  of  each  day  we  show  list  of  securities  on  hand, 
which  must  be  verified  by  the  contents  of  our  strong  box,  where 
they  are  under  lock  and  key.  One  member  of  the  firm  usually 
attends  to  this  matter  of  verification,  thereby  forestalling  pecula- 
tion of  a  dishonest  cashier. 

On  closing  the  business  for  Oct.  2d  we  make  another  summary. 

It  will  be  noticed  that  the  only  change  is  in  Southern  Railway, 
300  shares  of  which  was  used  in  negotiating  loan  with  Powhat- 
tan  Trust  Co.,  and  appears  in  the  CASH  LOANS  book  with  those 
acquired  during  the  day. 


SECURITIES  ON  HAND,  Oct.  1,  1901. 


500  So.  Railway. 

10m  U.  S.  Gov.  4s. 
450  N.  Y.  Central. 

25  So.  Pacific. 


100  Jones. 


Oct.  2,  1901. 
ST.  PAUL. 

100  Cash  Loan. 


STEEL  COMPANY. 
500  Smith.  500  Cash  Loan. 

PACIFIC  MAIL. 
100  B.  &  L.  100  Adams. 

UNION  PACIFIC. 
50  Brown.  50  Cash  Loan. 

SOUTHERN  RAILWAY  COMMON. 
500  on  hand.  300  Cash  Loan. 


500 


200  Over. 
500 


SECURITIES  ON  HAND,  Oct.  2,  1901. 


10m  U.  S.  Gov.  4s. 
450  N.  Y.  Central. 

25  So.  Pacific. 
200  So.  Railway  Com. 


When  one  side  of  the  line  is  full  we  continue  on  the  other  siox 


336  STOCK  BROKEKS'  BOOKS. 

MARGIN   BOOK. 

This  need  not  be  a  book,  as  a  large  silicon  slate  with,  many 
pages  would  answer  the  purpose.  In  case  a  book  is  used,  the  en- 
tries would  be  made  with  a  pencil,  as  they  would  be  subject  to 
many  changes  during  the  day,  when  market  is  very  active. 

First  entry  on  the  right  of  the  page  would  be  the  amount  of 
Margin  the  customer  has.  The  next  entry  would  show  the  stocks 
bought  or  sold  and  the  price,  extensions  being  unnecessary. 

JONES. 

Margin,  500. 
100  St.  Paul,  @  156*. 

As  St.  Paul  advanced  to  157  during  the  day,  no  change  is  nec- 
essary in  the  margin,  which  can  easily  be  seen  remains  intact. 
All  that  is  necessary  is  to  watch  the  fluctuations  in  the  price  of 
St.  Paul,  and  in  case  it  declines  three  or  four  points,  more  margins 
would  be  required,  as  each  point  declined  below  15  6 J  would  re- 
duce his  margin  $100. 

STOCK   LOANS   BOOK. 

This  is  a  small  pocket  memorandum  sent  over  to  the  broker  on 
the  floor  of  the  Exchange  in  case  we  wish  to  borrow  or  lend  stocks. 
The  figures  at  the  head  of  the  small  spaces  indicate  the  date  bor- 
rowed and  the  figures  in  the  spaces  are  the  interest  rates  for  that 
day.  On  Monday  we  borrow  for  Tuesday,  and  so  on  to  Saturday, 
when  we  borrow  for  Monday.  No  borrowing  on  Friday. 


BORROWING.                                       LOANING. 

OCTOBER                12345 

100 

Pacific  M. 

Selig.                  3 

EXHIBIT  F. 


The  following  form  and  matter  would  be  printed  on  a  large 
envelope,  4  X  10,  in  which  would  be  enclosed  the  securities  we 


STOCK  BROKERS'  BOOKS.  337 

put  up  when  negotiating  a  loan,  which  must  be  verified  and 
would  be  held  until  we  paid  off  the  loan  and  then  returned  te-4ia. 


DEMAND  LOAN. 


P.  A.  WRIGHT  &  CO. 
Borrow  from . . . .???$^?..73!** .9°: 

/"»/>+       g> 

IQOI 

amount. 

.......  ...rate. 


100 

500 

50 

300 


St.  Paul. 
Steel. 

Union  Pacific. 
So.  Pacific. 


COUPONS   AND   DIVIDENDS   BOOK. 

This  is  a  small  blank  book  without  ruling  in  which  would  be 
kept  a  list  of  dividend-paying  stocks  that  our  customers  deal  in. 
It  will  show  the  date  the  dividends  are  payable,  also  the  amount. 

One  half  of  this  book  will  show  the  same  facts  in  relation  to 
Coupons.  When  either  or  both  are  received,  and  all  belong  to 
one  customer,  his  account  would  be  credited  the  day  received  on 
the  "  Deliver  "  side  of  the  Blotter.  If  either  or  both  belong  to 
several  customers,  the  amount  of  either  would  be  credited  to  Divi- 
dend or  Coupon  account,  as  the  case  may  be,  in  lump  sum,  and 
distributed  among  the  customers'  accounts  through  the  Journal* 
charging  Dividend  (or  Coupon)  account,  and  crediting  each  custo- 
mer with  his  part  of  either  or  both.  Coupons  can  be  deposited! 
same  as  a  check. 

JOURNAL. 

This  is  an  ordinary  two-column  book  like  the  one  on  page  82. 
Nothing  has  occurred  thus  far  in  this  business  that  requires  a 
Journal  entry. 


338 


Dr. 


Dr. 


Dr. 


Dr. 


Dr. 


STOCK  BROKERS'  BOOKS. 

LEDGER. 
CAPITAL   ACCOUNT. 


Or. 


1901. 
Oct. 

1 

500  So.  Railway... 

1901. 
Oct 

1 

T  P  Noble 

$10  947 

16 

400  N.  Y.  Central. 
10m  u.  S.  Gov.  4s. 

UNION  BANK. 


Or. 


1901. 
Oct. 

1 

Balance  

$10,947 

16 

1901. 
Oct. 

Sundries  

$10,947 

16 

2 

9,434 

66 

JOHN   SMITH. 


Cr. 


1901. 

Oct. 

1 

50  N.  Y.  Central. 

25  So.  Pacific.  .  .  . 

2 

500  U.S.  Steel.... 

53^ 

$26,812 

50 

J.  JONES. 


Cr. 


1901. 
Oct 

g 

100  St  Paul  

156J4 

$15,637 

50 

1901. 
Oct. 

8 

Check  

$500 

W.  BROWN. 


Or. 


1901. 
Oft 

0 

50  Union  Pacific 

97 

$4856 

°5 

1901. 
Oct 

9 

Check          

$300 

00 

STOCK  BROKERS'  BOOKS. 


339 


LEDGER. 

Dr.                                          JOHN  ADAMS.                                            Cr. 

- 

1901. 
Oct. 

2 

100  Pacific  Mail... 

42^ 

$4,198 

00 

Dr. 


BORROWED  AND  LOAN. 


Cr. 


1901. 
Oct. 

2 

100  Pac.  M.  Selig. 

$4,300 

00 

Dr. 


CASH  LOAN. 


Or. 


1901. 
Oct. 

2 

Loan  Pow.  T.  Co. 

$45,000 

<K) 

Dr.                                             COMMISSION.                                               Cr. 

1901. 
Oct. 

2 

Sundries  

$93 

75 

Dr.                                   INTERNAL  REVENUE.                                    Cr. 

1901. 
Oct. 

2 

Sundries 

$2 

00 

340 


STOCK  BROKERS'  BOOKS. 


CHECK    BOOK. 

Filling  out  checks  is  an  easy  formality,  hence  the  check  part  of 
the  book  is  omitted  here.  All  we  need  for  present  purpose  is  the 
stub.  On  the  left  of  the  dividing  line  is  the  entry  of  deposit  on 
back  of  stub,  and  on  the  right  are  the  entries  for  checks  issued. 


CHECK  BOOK. 


DEPOSITS. 


CHECKS  DRAWN. 


Oct.  1— P.  A.  Wright $10,947.16 

"    2— Jones $500 

Smith 300 

Pow.  Trust 45,000 

C.  H.  Dft 237.50  46,OC7.50 


$56,984.66 


Oct.  2— Kune,  Low  &  Co. 

100  St.  Paul $15,700 

Van  Slack  &  Co. 

500  Steel  Com 27,000 

Vermille  &  Co. 

50  Un.  Pacific 4,850 

$47,550 


STATEMENTS. 

New  York  Stock  Exchange  firms  render  monthly  statements 
like  form  No.  2  on  page  315.  Form  No.  1  is  peculiar  to  some  of 
the  firms  on  the  Consolidated  Exchange.  The  former  charges  in- 
terest for  every  day,  that  is,  deals  closed  during  the  week  bear 
interest  for  each  day  until  closed.  The  Consolidated  Exchange 
brokers  charge  interest  only  when  long  stocks  are  carried  over 
Sunday,  but  they  charge  for  full  week.  In  case  a  deal  is  made  on 
Monday  and  closed  on  Saturday  or  any  other  day  of  that  week  no 
interest  is  charged,  but  if  made  on  Saturday  or  any  other  day  and 
closed  the  following  Monday  it  bears  interest  at  the  prevailing 
rate  for  one  week. 

No  interest  is  credited  on  the  short  sales  while  the  stock  is 
carried,  as  that  part  of  interest  is  a  legitimate  perquisite  of  the 
broker,  but  in  space  for  days  appears  the  word  flat.  When  the 
deal  is  closed,  the  customer  is  entitled  to  interest  on  the  amount 
from  the  date  closed  to  end  of  the  month,  or  time  of  rendering  his 
statement. 


STOCK  BECKERS'  BOOKS.  341 

CONTINGENT   POINTS. 

If  we  sell  any  of  the  Securities  which  had  been  previously  hy- 
pothecated in  negotiating  loans,  it  becomes  necessary  to  withdraw 
them  and  substitute  others  of  equal  value ;  this  proceedure  is  called 
"  making  substitutions. " 

Suppose,  for  instance,  that  we  borrowed  $50,000  @  Q%  from 
New  York  Bank,  Oct.  6,  1901,  giving  as  collateral 

500  Un.  Pacific  @  96, 

100  Anaconda  @  34, 

100  So.  Pacific  @  56, 

100  So.  Eailway  @  32. 

We  subsequently  sell  the  100  Anaconda  and  100  So.  Pacific 
and  issue  a  substitution  form,  5J  X  8^,  like 

EXHIBIT  Gr. 


P.  A.   WRIGHT  &   CO., 

148  WEST  14TH  STREET. 


New  York, 190 

To.. 

Loan , 

We  wish  to  icitfidrqw  the  following  securities : 

and  substitute  in  place  thereof 


Respectfully, 

P.  A.   WRIGHT  &  CO. 
Per... 


Calling  in  these  stocks  of  N.  Y.  Bank,  and  at  bottom  of  same 
form  we  name  the  stocks  that  we  desire  to  substitute,  say  100 
Sugar  @  114.  The  Anaconda  and  So.  Pacific  are  put  in  at  value 


342  STOCK  BROKERS'  BOOKS. 

of  $9,000,  but  the  Sugar  has  a  valuation  of  $11,400,  hence  strength- 
ens the  loan  $2,400,  which  gives  us  more  than  the  required  20$ 
margin.  When  we  make  another  substitution,  therefore,  we  can 
withdraw  $2,400  more  than  we  put  in  at  that  time.  The  above 
changes  are  noted  in  the  Cash  Loan  book  by  drawing  red  line 
through  Anaconda  and  So.  Pacific,  writing  on  the  left,  "With- 
drawn Oct.  7,  1901,"  and  at  the  bottom  of  first  list  we  add  100 
Sugar  @  114,  writing  on  the  left,  "Put  in  Oct.  7,  1901."  When 
the  loan  is  eventually  paid  off,  the  list  of  securities  will  of  course 
be  entirely  different  from  the  one  showing  those  originally  pledged. 

When  the  market  breaks  or  advances  sharply,  it  is  then  a  case 
when  borrowed  or  loaned  stocks  have  to  "  marker  to  the  market," 
as  it  is  called.  It  is  a  Cashier's  duty  to  keep  a  close  watch  of 
prevailing  quotations. 

If  he  had  borrowed  100  Pacific  M.  @  43  and  it  declines  to  38, 
he  must  call  upon  the  party  from  whom  he  borrowed  to  pay  the 
difference,  $500. 

If  it  reacts,  he 'can  be  called  upon  to  refund  the  difference  be- 
tween 38  and  the  present  price.  In  case  of  a  mark  down  or  mark 
up  the  entries  on  the  BLOTTER  would  be  the  following  (those  on 
the  "  Deliver  "  side  in  these  cases  are  counter  to  those  first  made 
on  the  "  Keceive  "  side  when  we  borrowed  the  stock — in  other 
words,  practically  cancels  first  entries ;  and  the  entries  here  on  the 
"  Eeceive "  side  are  the  same  as  if  new  transactions  at  reduced 
price  in  first  instance  and  advanced  price  in  the  second  instance) : 


MARKING   DOWN. 


To  RECEIVE. 


Kruse,  100  PC.  M.,  38,  3,800,  B.  &  L. 


To  DELIVER. 
Kruse,  100  PC.  M.,  43,  4,300,  B,  &  L. 


Interest. 


MARKING  UP. 


To  RECEIVE. 


Kruse,  100  PC.  M.,  47,  4,700,  B.  &  L. 


To  DELIVER. 

Kruse,  100  PC.  M.,  43,  4,300,  B.  &  L. 
Interest. 


In  these  transactions  checks  for  differences  only  are  passed. 
When  marked  up  we  issue  check  for  $400  less  the  interest  due  us; 


STOCK  BROKERS'  BOOKS. 


343 


but  if  marking  down  is  the  order  we  receive  check  for  $500  plus 
the  interest,  due  us.  We  would  then  mark  off  the  old  loan  jn 
"  return  "  space  in  Borrowed  and  Loan  book  and  enter  new  loan 
therein,  observing  date  in  both  cases. 

WHEN  THE  MARKET  BREAKS. 

In  case  of  a  violent  break  Cash  Loans  must  be  re-margined  to 
maintain  the  required  20^,  hence  we  hand  in  the  additional  mar- 
gin without  waiting  to  be  called  upon  for  it,  thereby  keeping  our 
reputation  good  with  the  lenders.  It  devolves  upon  the  Cashier 
to  attend  to  such  matters.  He  fills  out  form  5|  X  8-J  like 

EXHIBIT  H. 


P.   A.   WRIGHT   &   CO., 

148  WE§T  14TH  STREET. 


New  York, 190 


Herewith  we  hand  you  additional  margin  account  of  our 


loan  dated, , 


P.  A.   WRIGHT  &  CO. 


New  York 190 

deceived  of  P.  A.   WEIGHT  &  CO.,  additional  margin  account 
of  our  loan  dated, § 


DIVIDENDS. 

When  the  books  are  closed  for  dividend  purposes,  the  stocks 
should  be  transferred,  which  deprives  the  firm  of  their  use  for  24 


344  STOCK  BROKERS'  BOOKS. 

hours,  the  time  required  by  transfer  office.  Small  concerns  can- 
not afford  to  do  this,  hence  they  call  upon  the  party  in  whose 
name  the  stock  stands  for  a  due  bill  for  the  dividend,  like 

EXHIBIT  I. 

3i  X  7£.     Printed  with  large  primer  type,  black  ink. 


New  York, I 

Due 

or  order,  the  Dividend  declared  by  the 


I        ,  on Shares 

of  their  Stock,  payable  when  collected  of  the  Company. 


A  collection  charge  of  \%  is  usually  exacted  by  the  party  that 
Issues  due  bill,  for  his  trouble,  which  is  charged  to  Collection  ac- 
count. 

Buying  ten  Government  Bonds  is  equivalent  to  buying  100 
shares  of  stocks,  but  the  commission  is  only  half  as  much  on 
Bonds.  (Jg  =  $6.25  on  10  Bonds  and  -J-  =  $12.50  on  100  shares.) 

EXHIBIT  J. 

When  we  desire  to  pay  off  loan  or  return  borrowed  stocks,  we 
submit  the  following  form,  3^-  X  8,  properly  filled  out. 


New  York, 190 

To 

We  will to-day 


P.  A.  WRIGHT  &  CO. 


STOCK  BROKERS'  BOOKS.  345 

BUYER   THREE   DAYS. 

Some  transactions  are  made  on  the  floor  of  the  Exchange  "at  3 
days,"  which  means  the  buyer  has  three  days  of  grace  in  paying 
for  the  stock. 

For  instance,  we  buy  200  shares  of  St.  Paul  on  the  4th  @  154. 
Instead  of  putting  the  deal  through  our  books  on  the  5th  we  hold 
it  over  until  the  7th,  thereby  saving  two  days'  interest  to  ourselves 
and  customer.  The  reason  for  these  transactions  is  that  the  seller 
is  not  willing  to  offer  his  stock  -J-  below  prevailing  price,  but  rather 
than  lose  the  sale  he  is  willing  to  allow  the  extra  three  days  in 
paying  for  the  stock. 

This  deal  would  appear  on  the  tape  as  200  St.  P.,  154,  3. 

STOCK   CERTIFICATES. 

Certificates  are  made  out  with  the  name  of  the  party  to  whom 
issued  on  the  face  of  them. 

When  they  are  to  be  carried  as  margin,  however,  it  is  cus- 
tomary for  them  to  be  made  out  in  the  broker's  name,  so  that  he 
may  not  lose  control  of  them. 

They  must  be  endorsed  on  the  back  exactly  as  the  name  is 
written  on  the  face,  witnessed,  and  dated. 

If  the  certificate  is  made  in  the  name  of  another  party  than  a 
broker,  it  is  necessary  to  have  a  broker  endorse  it  to  make  a  good 
loan. 

Certificates  in  a  woman's  name  are  acceptable  as  collateral  for 
loans  with  a  Stock  Exchange  name  on  them,  but  would  not  be 
accepted  as  a  regular  delivery  if  sold.  The  stock  must  be  trans- 
ferred to  a  man's  name,  usually  the  name  of  the  broker  who  offi- 
ciates in  the  matter. 

Certificates  for  100  shares  or  less  require  a  2 5 -cent  revenue 
stamp,  which  must  be  cancelled  with  initials  and  date. 


346  BOOKKEEPING    SIMPLIFIED. 


THE  APPENDIX. 

After  reading  the  foregoing  pages  carefully,  it  will  be  an  easy 
matter  to  find  answers  to  the  following  questions,  as  the 
figures  in  parentheses  on  the  right  of  each  question  indicate  the 
page  on  which  the  answer  thereto  is  located,  at  least  in  sub- 
stance, if  not  in  so  many  words: 

1.  What  is  bookkeeping  in  its  simplest  sense?  (23)  2. 
What  is  an  account  ?  (17)  3.  What  is  meant  by  opening  an 
account  ?  (20)  4.  What  is  meant  by  on  account  ?  (20)  5.  What 
is  an  entry  ?  (19)  6.  What  is  a  double-entry  ?  (19)  7.  Upon 
what  great  principle  is  double-entry  founded  ?  (29)  8.  How 
many  classes  of  accounts  have  we  ?  (28)  9.  Name  them  ?  (28) 
10.  What  is  the  difference  between  representative  and  specu- 
lative accounts  ?  (28)  11.  What  do  you  understand  by  a  tan- 
gible existence  ?  (28)  12.  What  do  you  understand  by  a  nomi- 
nal existence?  (28)  13.  What  are  personal  accounts?  (28) 
14.  What  are  speculative'accounts  ?  (29)  15.  What  are  repre- 
sentative accounts  ?  (29)  16.  What  does  the  debit  balance  in 
Personal  and  Eepresentative  accounts  represent?  (28)  17. 
What  does  the  credit  balance  in  these  accounts  represent? 
(28)  18.  What  does  the  debit  balance  in  speculative  accounts 
represent?  (28)  19.  What  does  the  credit  balance  in  specu- 
lative accounts  represent  ?  (28)  20.  What  is  meant  by  Bal- 
ance ?  (18)  21.  What  is  meant  by  the  phrase  To  Balance 
account  ?  (21)  22.  What  is  meant  by  the  phrase  close  account  ? 
(18)  23.  What  is  the  difference  between  the  two  phrases 
balance  account  and  close  account  ?  See  definition  of  each  phrase. 
24.  What  are  the  duties  of  an  Entry  Clerk  ?  (19),  Bill  Clerk  ? 
(18),  Shipping  Clerk  ?  (21),  and  Call  Clerk  ?  (18)  25.  What 
is  the  first  thing  to  be  done  upon  assuming  charge  of  a  set  of 
books  as  a  successor  ?  (26)  26.  What  is  the  next  thing  in  or- 
der ?  (26)  27.  If  you  find  your  cash  does  not  agree  with 


A   COMMON-SENSE    VIEW    OF    BOOKKEEPING.  347 

Cash-book,  what  would  you  do?  (27)  28.  Why  not  learn 
what  accounts  are  open  on  the  Ledger  from  the  Index,  wTiefe 
they  are  alphabetically  arranged,  instead  of  the  Ledger? 
(27)  29.  If,  upon  making  out  your  Trial  Balance,  it  does  not 
agree,  what  would  be  your  conclusion  after  assuring  yourself 
your  work  was  correct  ? — Ans.  That  the  error  originated  in 
some  previous  month.  30.  What  would  you  do  in  that  case  ? 
—Ans.  Get  the  Trial  Balance  for  the  last  month  and  prove 
it,  if  possible.  If  not,  then  report  the  fact  to  the  proprietor  of  the 
books.  31.  How  many  rules  have  we  governing  debits  and 
credits  ?  (29)  32.  Repeat  those  governing  debits  (29)  and  those 
governing  credits.  (29)  33.  What  is  the  first  law  of  double- 
entry  ?  (29)  34.  Repeat  the  rules  affecting  Personal  accounts 
^29),  also  Representative  (29)  and  Speculative  accounts.  (29) 
35.  What  is  double-entry  book-keeping  ?  (30)  36.  What  are 
the  conditions  under  which  Personal  accounts  are  debited 
(30),  also  those  under  which  they  are  credited?  (30)  37. 
What  other  signs  have  we  for  debits  and  credits  besides  the 
eight  short  rules  and  the  conditions  above  alluded  to?  (30) 
38.  What  is  the  usual  acceptation  of  the  meaning  of  the  word 
Journalizing  ?  (7)  39.  What  is  our  acceptation  of  its  meaning  ? 
(20)  In  what  do  the  principles  of  Journalizing  consist  ?  (31) 
40.  How  many  accounts  must  necessarily  be  affected  by  every 
Journal  entry  ?  (31)  41.  How  many  forms  of  Journal  entries 
have  we?  (31)  42.  What  do  you  understand  by  the  con- 
struction of  an  entry  ?  (31)  43.  State  how  many  accounts  enter 
into  the  first  form,  and  give  the  construction  thereof .  (31) 
44.  State  what  constitutes  each  of  the  other  forms,  and  give 
the  construction  of  each.  (32)  45.  How  many  contingencies 
are  to  be  considered  in  making  Journal  entries  ?  (31)  What 
are  they  ?  (31)  46.  What  class  of  accounts  would  you  dispose 
of  first  in  determining  whether  they  are  to  be  debited  or  credi- 
ted? (31)  47.  What  class  is  next  disposed  of?  (31)  48. 
What  do  you  understand  by  Sundries  ?  (21)  49.  Does  Sun- 
dries as  a  figure-head  ever  appear  on  a  line  by  itself  in  Jour- 
nal entries  ?  (33)  50.  What  feature  is  peculiar  to  all  Journal 
entries?  (33)  51.  Would  it  be  proper  to  write  Mdse.  Dr.  to 


34:8  BOOKKEEPING   SIMPLIFIED. 

Sills  Payable  all  on  one  line  ?  (33)  52.  Name  the  four  princi- 
pal books  ?  (41)  53.  Name  the  auxiliaries  as  given  herein  \  (41) 
54.  When  would  other  auxiliaries  be  introduced  ?  (41)  55. 
What  do  you  understand  by  original  entry  ?  56.  What  are  the 
books  of  original  entry?  (41)  57.  What  does  posting  mean? 
(20)  58.  When  could  we  keep  all  our  records  on  one  book  ? 
(41)  59.  When  would  it  be  impossible  to  do  so  ?  (41)  60. 
What  facts  must  a  book-keeper  be  furnished  with  to  enable 
him  to  open  a  set  of  books  properly  ?  (42)  61.  In  what  book 
or  books  would  he  make  first  entry  or  entries?  (42)  62. 
What  accounts  usually  appear  first  in  the  Ledger  ?  (43)  63. 
What  is  the  first  step  preparatory  to  closing  the  Ledger,  to 
find  out  if  we  have  made  or  lost  money  ?  (43)  64.  What  class 
of  accounts  are  closed  first  ?  (43)  65.  Is  it  necessary  to  make 
Jouanal  entries  to  close  them  ?  (44)  66.  How  are  they  closed  ? 
(43  &  44)  67.  Into  what  account  is  Profit  and  Loss  account 
closed  when  the  partners  have  both  personal  and  stock  ac- 
€ounts  ?  (44)  68.  What  do  you  understand  by  Resources  (21). 
also  Liabilities?  (20)  69.  If  Resources  are  greater  than  Lia- 
bilities, what  will  the  excess  represent  ?  (45)  70.  What  proof 
have  we  that  this  difference  is  correct  ?  (45)  71.  If  the  liabil- 
ities are  greater  than  Resources,  what  will  the  difference 
show  ?  (45)  72.  What  does  it  mean  in  a  single  word  ?  (20) 
73.  What  class  of  accounts  are  reopened  at  the  beginning  of  a 
new  season  ?  (45)  74.  How  are  they  reopened  ?  (45)  75.  If 
the  Ledger  will  not  last  another  season,  what  disposition  is 
made  of  the  balance  in  those  accounts  to  be  reopened  ?  (45) 
76.  After  using  more  than  one  Ledger,  or  in  fact  any  other 
book,  how  can  you  tell  to  which  book  the  folio  references 
apply  ?  (45)  77.  In  opening  a  new  Ledger,  where  would  you 
get  the  names  of  accounts  to  appear  therein  ?  (46)  78.  By 
what  system  are  Bank  book-keepers  enabled  to  refer  to  their 
accounts  without  use  of  the  index  ?  (46)  79.  What  is  the 
first  step  necessary  in  changing  single  into  double-entry? 
(46)  80.  What  is  the  next  step  in  that  direction  ?  (46)  81. 
How  would  you  ascertain  by  single-entry  books  what  the 
profits  or  losses  of  the  business  were  ?  (47)  82.  What  is  a 


A  COMMON-SENSE    VIEW    OF    BOOKKEEPING.  349 

Trial  Balance  ?  (21)  83.  What  is  the  two-fold  object  of  a 
Trial  Balance  ?  (47)  84.  What  is  the  usual  form  of  a  Trial 
Balance  ?  (47)  85.  When  would  &  four-column  Trial  Balance 
be  advantageous  ? — Ans.  In  a  large  business  where  there  are 
many  transactions  every  month,  and  many  operations  that  would 
have  to  be  examined,  in  the  event  an  error  is  made.  86.  When 
would  the  first  form  of  Trial  Balance  serve  the  purpose  best  ? 
— Ans.  In  a  small  business  in  which  but  little  time  would  be 
required  to  locate  any  error  that  might  exist.  87.  When  is  it 
proper  to  use  red  ink  ?  (50  &  51.)  88.  What  do  you  under- 
stand by  seeing  a  double  red  line  under  figures  ?  (51)  89. 
What  does  capital  account  represent  ?  (105)  90.  Is  it  neces^ 
sary  to  keep  the  partners'  personal  and  their  capital  account 
under  different  headings  ?  (105)  91.  When  they  are  so  kept, 
how  is  the  personal  account  closed  ?  (105)  92.  What  does  per- 
sonal account  represent  ?  (105)  93.  What  does  Cash  repre- 
sent? (18)  94.  What  does  the  debit  side  of  the  Cash-book 
show  ?  (51)  95.  WThat  does  the  credit  side  of  the  Cash-book 
show  ?  (51)  96.  Which  side  must  be  the  greater,  if  there  is 
any  difference?  97.  What  does  the  difference  show?  (18) 
98.  Do  the  discount  items  on  either  side  of  the  Cash-book 
affect  the  Cash  in  any  way  ? — Ans.  Not  as  they  are  introduced 
in  our  Miniature  Cosh-book. 

Many  experienced  book-keepers,  hoivever,  reverse  the  columns  ; 
that  is,  for  discounts  allowed  by  our  firm  they  enter  in  discount 
column  on  credit  side  of  C.  B.,  and  the  discounts  we  make  they 
enter  in  discount  column  on  debit  side,  whereby  the  discount  be- 
comes part  of  the  Cash.  For  example,  let  us  suppose  a  customer 
owes  us  $150,  which  he  pays  in  cash  less  6 per  cent  ($9.00)  or  $141 
net :  it  would  be  entered  as  $150  on  debit  side  of  Cash ;  and  on 
the  credit  side,  Discount  would  be  charged  with  $9.00,  the  net  re- 
sult being  $141  in  favor  of  debit  side,  or  the  actual  amount  Cash 
received.  If  ive  paid  a  bill  less  discount,  the  full  amount  of  the 
bill  would  be  entered  on  credit  side  of  Cash  as  though  it  was  paid 
in  full,  and  the  discount  would  be  credited  by  entering  it  on  debit 
side  of  Cash  in  the  discount  column,  as  though  that  much  had  been 
refunded. 


350  BOOKKEEPING    SIMPLIFIED. 

This  manner  of  keeping  the  discount  columns  falsifies  our  whole 
Cash  record,  showing  that  ice  receive  and  pay  out  hundreds  of 
dollars  that  ive  never  handle,  although  the  cash  ivill  prove  and  the 
net  result  be  correct. 

99.  Is  it  necessary  to  keep  &  petty  cash  book  ?  (53)  100.  How 
can  it  be  avoided  ?  (53)  101.  When  a  petty  cash  book  is  kept 
what  does  the  difference  between  the  two  sides  represent  ?  (53) 
102.  How  often  should  the  Cash-book  be  proved  ?  (54)  103. 
What  is  the  nature  of  the  individual  amounts  on  the  Sales- 
book — are  they  debits  or  credits  ?  (54)  104.  Where  do  you 
get  the  counter"  entry  for  the  individual  amounts  on  the  S.  B. 
so  as  to  have  a  double-entry  ?  (54)  105.  Is  it  proper  to  render 
a  bill  before  making  the  entry  on  Sales-book  ?  (54)  106. 
What  is  the  official  name  of  the  clerk  who  makes  the  entry  in 
Sales-book  2  (19)  .  107.  Is  it  necessary  to  add  the  columns  in 
the  Journal  ? — Ans.  Not  unless  there  are  special  columns,  when 
it  would  be  necessary  to  add  every  column  to  prove  their  correct- 
ness. 108.  What  would  likely  be  the  result  of  making  entries 
in  the  Ledger  first  ?  (55)  109.  How  would  you  find  out  how 
much  any  one  owes  us  or  how  much  we  owe  any  one  else  2 
(55)  110.  How  often  is  the  Ledger  closed  ?  (55  <fc  56)  111. 
What  is  meant  by  a  season  ?  (55)  112.  Is  it  proper  to  close 
Ledger  accounts  when  they  balance  by  a  concurrence  of  regu- 
lar entries,  or  at  bottom  of  the  page  when  it  becomes  necessary 
to  transfer  them  to  another  page  ?  (56)  113.  What  is  the 
advantage  in  carrying  the  footing  of  each  account  to  the  close 
of  the  season  ?  (56)  114.  How  many  groups  of  perpendicular 
red  lines  are  there  on  a  Ledger  page  ?  (56)  115.  What  con- 
stitutes each  group  ?  (56)  116.  What  is  the  object  of  the 
oblique  red  line  on  any  book  ?  (57)  117.  Is  it  necessary  to 
keep  a  bank  account  on  the  Ledger?  (57)  118.  Where  do 
we  keep  a  record  of  all  transactions  with  the  bank  ?  (57) 
119.  Is  it  necessary  to  enter  upon  the  stub  of  Check-book  the 
name  of  each  check  constituting  the  deposit  ?  (57)  Why  ? 
(57)  120.  Why  deduct  every  check  as  soon  as  drawn,  and 
not  wait  until  all  the  checks  on  that  sheet  are  used,  or  pos- 
sibly until  the  end  of  the  day,  as  many  do,  and  deduct  the 


A   COMMON-SENSE    VIEW    OF    BOOKKEEPING.  351 

total  ?  (57)  121.  What  facts  should  the  stub  from  which  each 
check  is  detached  show  ?  (57)  122.  Why  is  it  necessary  to 
enter  the  facts  thereon  before  filling  out  the  check  ?  123. 
What  is  the  object  of  making  a  check  payable  to  Bearer,  Cash, 
or  Currency  ? — Ans.  So  that  any  one  presenting  it  can  get  the, 
money  without  being  subjected  to  the  inconvenience  of  identification. 
124.  If  such  a  check  is  lost,  how  would  you  prevent  its  pay- 
ment to  the  finder  ?  (58)  125.  What  is  the  object  of  having 
a  check  certified  ? — Ans.  To  assure  the  party  to  ivhose  order 
it  is  payable  that  the  money  will  be  held  for  him  by  the  bank. 
126.  If  you  decide  not  to  use  the  check  after  certification,  what 
would  you  do  with  it ;  if  you  destroyed  it  you  could  not  claim 
the  amount  it  represented,  nor  could  anybody  else,  without 
trouble  ?  (58)  127.  Is  it  not  necessary  to  take  the  bank's 
receipt  for  money  deposited  therein  ?  (58)  128.  What  book 
is  used  for  that  purpose  ?  (58)  129.  How  often  should  the 
Pass-book  be  balanced  ?  (58)  130.  Will  our  balance  in  bank 
as  indicated  by  our  Check-book  agree  with  the  actual  balance 
at  our  credit  in  bank  as  indicated  by  Pass-book  ?  (58)  131. 
Which  would  likely  be  the  greater,  and  why ?  (58)  132.  What 
would  you  do  with  the  Vouchers  returned  you  by  the  bank  ? 
— Ans.  File  them  away  for  reference.  133.  Is  it  necessary  to 
require  a  receipt  for  payments  by  check  ?  Why  ?  (60) 
134.  What  do  you  understand  by  Vouchers  ?  (58)  135.  What 
does  Bills  Payable  represent?  (18)  136.  What  does  the 
credit  side  of  Bills  Payable  account  show?  (109)  Also  the 
debit  side?  (109)  137.  Which  side  must  be  the  greater,  if 
there  is  any  difference?  Why?  (109)  138.  What  will  the 
difference  represent?  (109)  139.  What  facts  should  Bills- 
Payable-book  show?  (60)  140.  What  superfluous  columns 
are  usually  found  on  ready-made  Bills-Payable-books  ?  (60) 
141.  What  is  meant  by  Bills  Eeceivable  ?  (18)  142.  What 
does  the  debit  side  of  Bills  Keceivable  account  show  ?  (107) 
Also  the  credit  side  ?  (107)  143.  Which  side  must  be  the 
greater,  if  there  is  a  difference?  Why?  (107)  144.  What  does 
the  difference  in  Bills  Receivable  account  represent  ?  (107) 
145.  What  facts  should  Bills-Eeceivable-book  set  forth  ?  (61) 


352  BOOKKEEPING    SIMPLIFIED. 

146.  In  what  particular  does  the  Bills-Keceivable-book  differ 
from  Bills  Payable?  (61)  147.  What  proof  have  we  that 
our  Bills-Keceivable-book  or  account  is  correct?  (61)  148. 
What  is  meant  by  Accounts  Receivable  ?  (17)  149.  What  is  the 
difference  between  Sills  Receivable  and  Accounts  Receivable  ?  (17 
&  18)  150.  Why  is  it  to  our  advantage  to  get  our  Accounts 
Keceivable  converted  into  Bills  Receivable  ?  (109)  151.  Under 
what  date  would  you  make  entries  in  the  Accounts-Receivable- 
book,  date  of  purchase  or  date  of  maturity  ?  (62)  152.  What 
do  you  understand  by  Accounts  Payable  ?  (17)  153.  What  is 
the  difference  between  Bills  Payable  and  Accounts  Payable  ? 
(17  &  18)  154.  What  do  you  understand  by  the  phrase  on 
file  or  filing  papers  ?  (62)  155.  When  would  an  Invoice-book 
be  convenient  ?  (62)  156.  Why  would  you  require  employes 
to  accept  their  dues  weekly  or  periodically?  (110)  157.  If 
you  desire  to  draw  on  a  customer,  why  correspond  with 
some  bank  in  the  town  where  he  is  located  instead  of 
drawing  through  your  own  bank  ?  (108)  158.  What  record  is 
kept  of  drafts  before  they  are  paid? — Ans.  None  but  the 
stub  of  draft-book,  which  should  show  date  of  draft,  time  to  run, 
to  whom  it  was  sent  for  collection,  on  ivhom  it  tvas  draivn,  and 
the  amount.  159.  What  is  meant  by  Inventory  ?  (19)  160. 
Should  the  Inventory  show  cost  price,  selling  price,  or  present 
valuation  ?  (19)  161.  What  is  the  operation  of  preparing  an 
inventory  technically  called  ?  (21)  162.  What  does  the  debit 
side  of  our  customers'  account  show  (107),  also  the  credit  side 
(107),  and  the  difference  which  might  be  in  favor  of  either  side, 
but  most  likely  in  favor  of  debit  ?  (107)  163.  What  does  the 
credit  side  of  the  account  of  those  from  whom  we  buy  show 
(107),  also  the  debit  side  (107),  and  the  difference?  (107) 
164.  What  does  Merchandise  represent  ?  (20)  165.  What  does 
the  debit  side  of  Mdse.  account  show  (106),  also  the  credit 
side  ?  (106)  166.  What  will  the  difference  show  before  credit- 
ing the  inventory  ?  (106)  167.  What  will  the  difference  show 
after  crediting  the  inventory?  (106)  168.  What  becomes  of 
the  difference  upon  closing  the  Ledger  ?  (43)  169.  What  be- 
comes of  the  inventory  ?  (106)  170.  Why  would  it  be  imprac- 


A   COMMON-SENSE   VIEW   OF  BOOKKEEPING.  353 

ticable  to  have  a  Balance  account  in  the  Ledger  ?  (112)  171. 
When  would  Office  Furniture  account  likely  have  a  crediT?" 
(105)  172.  When  would  Expense  account  have  a  credit? — 
Ans.  When  we  dispose  of  anything  for  a  consideration  that  had 
been  previously  charged  to  Expense.  173.  Is  Office  Furniture 
included  in  the  inventory  at  close  of  the  season  ? — Ans.  Not 
unless  it  was  charged  to  Mdse.  when  purchased,  instead  of  an 
OFFICE  FUKNITUKE  account.  If  it  had  been  charged  to  Expense 
when  bought,  Expense  account  would  be  entitled  to  credit  by  the 
present  valuation  of  the  furniture.  174.  What  is  Interest  (20), 
also  Discount  ?  (19)  175.  What  is  the  difference  between  In- 
terest and  Discount  ? — Ans.  Interest  means  percentage  added 
and  Discount  percentage  deducted;  they  are  usually  combined  in 
one  account  called  DISCOUNT  AND  INTEREST,  but  can  be  used  sepa- 
rately to  represent  any  special  percentage.  176.  What  does 
Profit  and  Loss  account  represent  ?  (Ill)  Which  side  shows 
profits,  and  which  side  Loss  ?  (Ill)  177.  Is  it  not  a  misnomer 
as  it  reads  ? — in  other  words,  would  not  Loss  and  Gain  be 
more  appropriate  ?  178.  When  are  Department  accounts  re- 
quired ?  (112)  179.  How  are  Department  Expense  accounts 
closed  ?  (113)  180.  How  are  the  Department  accounts  closed  ? 
(113)  181.  How  would  the  General  Expense  account  be 
closed  in  department  books?  (112)  182.  State  the  propor- 
tion. (112  &  113)  183.  In  long  accounts,  where  there  are 
many  payments,  how  would  you  identify  the  bills  covered  by 
each  payment?  (113)  184.  What  would  be  the  object  of 
identifying  the  items  that  enter  into  each  settlement?  (113) 
185.  What  is  a  Balance  Sheet  ?  (18)  186.  What  is  the  differ- 
ence between  a  Trial  Balance  (21)  and  a  Balance  Sheet  ?  (18) 
187.  What  is  a  note  ?  (20)  188.  What  is  an  acceptance  ?  (17) 
189.  What  is  the  difference  between  a  Note  and  an  Accept- 
ance ?  (17  &  20)  190.  What  is  a  Check  ?  (18)  191.  What  is  a 
Draft?  (19)  192.  What  is  the  difference  between  a  Check 
and  a  Draft  ?  (18  &  19)  193.  What  is  the  difference  between 
a  Sight  Draft  and  a  Time  Draft  ?  (135)  194.  What  is  a  Certifi- 
cate of  Deposit  ?  (18)  195.  What  is  an  Account  Current  ?  (17) 
196.  What  is  an  Account  Sales  ?  (17)  197.  What  is  meant  bj 


354:  BOOKKEEPING    SIMPLIFIED. 

Net  Proceeds?  (17)     198.  What   does    Commission  represent? 
(17)     199.  What  is  meant  by  Averaging  Accounts  ?   (17  &  18) 

200.  What  accounts  show  profits  (or  losses),  also  assets  ?  (27) 

201.  What  does  Expense  represent?  (19)      202.  What  is   the 
first  thing  to  be  done  when  another  partner  is  admitted  into 
the   firm?  (54)      203.  What   is   meant   by   taking   stock?  (21) 

204.  What  is  meant   by  the  phrase  "  without   recourse"  ?  (21) 

205.  When  is  it  used  ?  (108)     206.  What  does  Suspense  account 
represent?  (21)      207.  What   are  the    fundamental  principles 
of  a  business  education,  that  is,  the  necessary  qualifications  ? 
(140)     208.  What  is  the  object  of  having  Special  Columns  ?  (51) 
209.  What  is  the  difference  between  Date  columns  and  Amount 
columns  ?  (55)     210.  What  are  the  most  essential  qualifications 
in  a  good  book-keeper  ?  (24)     211.  Why  should  everybody  un- 
derstand book-keeping  ?  (24)     212.  What  is   the   best  way  to 
learn  book-keeping  ?  (23) 


TENTH   AFTERTHOUGHT. 

Acceptances  having  less  than  thirty  days  to  run  would  be 
kept  on  temporary  file  on  the  cashier's  desk  until  due,  then  paid 
and  entered  in  Cash  Book;  hence  no  Journal  entry  would  be 
necessary  at  the  time  of  accepting  the  draft. 

The  transactions  stated  in  paragraph  98,  page  186,  and  para- 
graph 122,  page  194,  although  both  have  less  than  thirty  days  to 
run,  are  carried  through  the  Journal  and  Bill  Books  to  illustrate 
how  such  matters  would  be  treated  when  the  time  to  run  would 
be  longer  than  thirty  days,  which  would  make  the  acceptances  as- 
sume the  nature  of  bills  payable  in  the  first  case  and  bills  receiv- 
able in  the  latter. 


APPENDIX.  355 


FIRST   LESSON. 

213.  How  many  principal  books  do  we  require?  Name 
them.  214.  How  many  books  of  original  entry  ?  Name  them. 
215.  State  what  each  book  is  used  for.  Describe  each  book 
as  to  ruling,  arrangement  of  columns,  spaces,  etc.  216.  How 
many  auxiliary  books  are  introduced  in  this  course  of  practice  ? 
217.  When  would  others  be  introduced?  218.  What  do  we 
use  the  Check-book  for  ?  219.  For  what  purpose  is  the  Bill- 
book  used  ?  220.  In  which  book  did  you  make  the  first  entry  in 
opening  this  set  ?  221.  What  became  of  the  two  checks  that 
were  presumably  turned  over  to  the  Book-keeper  by  the  two 
partners  ?  222.  Where  did  you  make  a  memorandum  showing 
what  disposition  had  been  made  of  them  ?  223.  What  was 
the  object  of  depositing  all  the  money  in  the  bank,  then  im- 
mediately drawing  out  part  of  it  ?  Ans.  Because  the  money  de- 
posited ivas  in  two  large  amounts,  ivhich  would  be  unwieldy  in  mak- 
ing small  payments  ;  and  the  money  dratvn  out  was  in  various 
denominations,  from  pennies  upward  to  $10  bills.  224.  What 
part  of  Cash-book  represents  the  daily  cash  ?  225.  What  part 
represents  the  monthly  cash  ?  226.  How  often  should  the 
daily  Cash-book  be  closed?  227.  How  often  should  the  cash 
be  proven  ?  228.  After  proving  the  cash  each  day,  what  is  the 
next  process  called  ?  229.  What  is  meant  by  Balancing  the 
Cash?  230.  What  is  meant  by  Closing  the  Cash?  231. 
What  is  the  object  of  special  columns?  232.  Why  is  it 
we  have  a  special  Expense  column  on  the  right  hand  side 
of  the  Cash-book  instead  of  the  left  ?  233.  Why  do  we  not 
have  a  special  Mdse.  column  on  the  credit  side  of  C.  B., 
as  well  as  on  the  debit  side?  234.  How  do  you  read  the 
entries  on  the  debit  side  of  C.  B.  ?  235.  How  do  you  read 
those  on  the  credit  side?  236.  In  posting  from  C.  B., 
what  amounts  are  transferred  to  the  Ledger?  237.  Why 


356  APPENDIX. 

must  checks  be  endorsed  in  the  nrm  name  before  depositing  ? 
Ans.  So  that  the  bank  may  know  to  whom  to  return  them  if  not  paid  ; 
besides,  the  check  could  not  be  negotiated  without  the  endorsement, 
if  made  payable  to  the  firm's  order.  If  the  firm  name  is  P.  A. 
Wright  &  Co.,  and  the  check  reads  '  pay  to  the  order  of  P.  A. 
Wright,'  ivith  the  <  &  Co.'  omitted,  the  check  must  first  be  endorsed 
P.  A.  Wright,  as  it  is  written  in  the  body  of  the  check,  then  thefull 
firm  name  underneath.  238.  Which  is  the  proper  way  to  en- 
dorse checks.  Ans.  Turn  downward  the  right  hand  end,  then 
write  across  the  check  about  two  inches  from  the  upper  end,  PAY  TO 
THE  OKDEE  or — (naming  the  person  to  whom  it  is  transferred) — or 
FOB  DEPOSIT  IN — (naming  the  bank).  If  the  check  should  be  turned 
the  other  way,  as  they  often  are,  and  endorsed  across  the  right  hand 
or  signature  end,  it  makes  the  receiving  teller  lose  his  patience,  also 
religion  (?) — in  other  words,  swear — to  have  to  look  in  unusal  places 
for  the  endorsement.  239.  Why  should  the  cash  be  proven 
every  evening  ?  240.  How  would  you  dispose  of  Cash  over  or 
Cash  short  ?  241.  Explain  how  the  Cash-book  is  closed.  242. 
Why  did  we  add  the  cost  of  various  articles  of  office  furniture 
before  extending  the  figures  into  the  column  ?  243.  Why  not 
also  add  the  cost  of  the  several  items  of  expense  into  one 
amount,  instead  of  extending  each  line  ?  244.  Why  would  it  be 
wrong  to  charge  the  cost  of  the  furniture  in  the  office  to  Ex- 
pense ?  245.  After  several  years  use  of  the  furniture,  it  is  cer- 
tainly not  w^orth  as  much  as  it  cost  us  :  what  then  must  be  done? 
246.  Which  of  the  books  introduced  in  this  set  is  kept  by  sin- 
gle entry  ?  247.  What  sign  havs  we  for  debiting  the  bank-ac- 
count ;  also  what  sign  for  crediting  it  ?  248.  What  is  the  ob- 
ject of  repeating  Dr.  and  Cr.  on  the  same  page  in  connection 
with  other  Ledger  accounts  ?  249.  In  posting  from  the  Cash- 
book,  do  we  complete  the  double  entry  in  the  Ledger  with 
each  transfer  ?  250.  What  part  of  the  entry  is  posted  from 
the  left  hand  page  in  the  C.  B.?  251.  Which  part  is  posted  from 
the  right  hand  page  ?  252.  Is  there  really  any  difference  in 
the  posting  from  C.  B.  and  from  the  Journal :  in  other  words, 
is  there  anything  antagonistic  to  the  principle  envncia^4  in 
paragraph  23  ? 


APPENDIX.  357 

SECOND  LESSON. 

253.  What  is  the  first  thing  to  decide  about  transactions 
that  must  be  recorded  in  the  Journal  ?  Ans.  The  number  of 
accounts  that  ivill  appear  in  tJie  entry.  254.  What  is  the  next 
thing  to  be  known  before  we  can  formulate  the  entry  ?  Ans. 
How  the  accounts  will  be  affected;  that  is,  which  tvill  be  debited  and 
ivhich  credited.  255.  How  do  we  conclude  how  many  accounts 
will  be  in  the  entry  ?  256.  Would  it  be  safe  to  enter  all  in- 
voices we  find  on  our  desk,  without  knowing  whether  they  were 
right  or  wrong ;  that  is,  whether  we  had  received  the  articles 
the  bills  call  for  ?  257.  How  would  we  know  the  goods  were 
in  store  ?  258.  How  would  we  know  the  amount  of  the  bill 
was  correct  ?  259.  After  entering  them,  what  distinctive  mark 
do  we  make  on  them,  to  show  that  they  had  been  entered  and  to 
prevent  re-entering  ?  260.  When  should  the  posting  be  done  ? 
261.  What  is  our  post-mark  ?  262.  How  could  you  determine 
which  book  of  original  entry  the  figures  refer  to  in  the  folio 
column  in  the  Ledger.  Ans.  By  the  word  used  in  the  space 
for  descriptive  matter  •  that  is,  CASH  in  that  space  would  indicate 
that  tJie  item  was  posted  from  C.  B.  MDSE.  on  the  debit  side  of 
any  account  ivould  indicate  that  the  matter  came  from  S.  B.;  and 
MDSE.,  SUNDS.,  or  any  other  word  on  credit  side  of  any  account,  would 
indicate  that  the  figures  meant  Journal  pages.  263.  How  would 
you  know  how  much  space  to  assign  each  Ledger  account? 
264.  How  are  Ledger  accounts  arranged  for  convenience  ?  265. 
What  is  the  object  of  a  Lock-ledger  ?  266.  What  other  kind 
of  Ledgers  are  kept  in  a  large  business?  267.  In  making 
Trial  Balance,  will  each  Ledger  balance  in  itself?  268.  In 
transferring  figures  from  one  page  to  another,  what  phrase 
would  we  use  ?  269.  What  phrase  would  we  use  on  the  page 
to  which  the  transfer  was  made  ?  270.  In  entering  sales,  what 
word  do  we  use  in  fixing  the  obligation  ?  271.  What  word  is 
synonymous  with  it  ?  272.  In  posting  from  the  Sales-book,  do 
we  complete  the  double  entry  with  each  transfer?  273. 
What  part  of  the  entry  is  transferred  ?  274.  When  would  the 
counterpart  be  completed  ?  275.  Why  do  we  put  our  custom- 


358  APPENDIX. 

er's  address  in  the  Ledger  account  ?  276.  Why  is  it  important 
to  keep  the  address  of  employees  ?  277.  Who  are  our  cus- 
tomers in  this  imaginary  business  ?  278.  Who  are  our  credi- 
tors ?  279.  How  'many  forms  of  Journal  entries  have  we  ? 
280.  How  can  we  determine  which  form  to  use  ?  281.  How 
do  we  read  each  form  ?  282.  Which  form  would  fee  all  that  is 
necessary?  283.  What  is  the  object  of  the  others?  284. 
Suppose  we  buy  and  receive  goods  from  three  firms  on  ac- 
count, in  what  book  would  we  record  the  facts  ?  285.  How 
many  accounts  would  there  be  in  the  entry  ?  Name  them.  286. 
Which  form  of  entry  would  it  be  ?  287.  What  explanation 
would  you  make,  showing  what  had  transpired  ?  288.  What 
is  meant  by  the  phrase  On  file  ?  289.  What  is  meant  by  the 
phrase  On  account  ? 


THIRD  LESSON. 

290.  What  is  a  note  ?     291.  WThat  is  a  note  made  by   an- 
other person  or  firm  called  ?     292.  What  is  our  note  called  ? 

293.  If  we  receive  a  note  from  a  customer  to  settle  his  account, 
less  a  certain  discount,  in   which  book  would  you  enter  it? 

294.  How  many  accounts  would  be  in  the  entry  ?  295.  Which 
form  of  entry  would  be  required  ?     296.  How  do  you  know  ? 
297.  Give  your  reasons  for  your  debits,  also  for  your  credits 
in  the  entry  ?     298.  What  is  most  important  to  state  in  every 
entry  relating  to  notes  ?     See  ansiver  to  questions  139  and  145, 
in  Appendix.  299.  What  is  the  difference  between  an  entry  and 
a  memorandum  ?     300.  If  we  give  a  creditor  our  note  to  settle 
his  account  less  a  certain  discount,  in  which  book  would  you 
enter  it  ?     301.  How  many  accounts  would  be  in  the  entry  ? 
302.  Which  form  of  entry  would  be  applicable  ?     303.  How  do 
you  know  ?  304.  State  your  reasons  for  debiting  some  ;  also  for 
those  you  credit.    305.  Where  do  we  make  an  extra  memoran- 
dum of  all  notes  we  issue  ;  also  those  we  receive  ?     306.  How  do 
you  fix  the  date  of  maturity.     Ans.  By  counting  the  actual  num- 


APPENDIX. 


359 


ber  of  days  remaining  in  that  month,  from  the  date  of  note,  and 
adding  to  it  as  many  days  in  the  next  month  or  months  as  are  re- 
quired to  make  the  full  time  of  the  note,  and  adding  three  days  of 
grace.  If  the  note  reads  so  many  months  after  date,  then  count 
the  months  without  reference  to  days  in  each,  adding  three  days  to 
the  same  date  in  the  last  month  as  the  day  indicating  date  in  the 
first  month.  307.  Name  the  first  account  in  your  entry  of  the 
Third  Form.  308.  Name  the  second  account  in  your  entry  of 
the  Second  Form.  309.  Would  you  put  the  Ledger  folios  or 
post-marks  in  red  ink  or  black  ?  When  would  it  be  proper  to 
use  red  ink?  Seepage  50,  Rules  for  Use  of  Red  Ink.  310.  Why 
would  it  be  objectionable  to  use  red  ink  for  post-marks  ?  Ans. 
Because  it  would  be  bad  taste,  and  be  waste  of  time  changing  from 
one  pen  to  anotJier. 


FOURTH  LESSON. 

311.  WThat  is  meant  by  re-opening  the  Cash-book  ?  312. 
Would  you  re-open  it  at  night,  or  in  the  morning  ?  Ans.  In 
the  morning,  upon  beginning  tJie  day's  work;  on  the  same  principle 
that  ivhen  we  close  our  door  at  night,  we  do  not  re-open  to  have  it 
ready  for  entrance  next  morning,  but  leave  it  closed  until  ready 
to  enter,  then  re-open  it.  313.  Would  you  repeat  the  month  or 
ditto  it  (thus,  ,,)  each  day  ?  Ans.  No,  because  that  month  would 
be  understood  until  next  month  is  written.  314.  Would  you  re- 
peat the  day  of  the  month  or  ditto  it  the  same  way  with  each  en- 
try ?  Ans.  No,  because  the  book  is  closed  by  red  lines  daily,  and 
the  same  date  would  be  understood  for  every  entry  between  the  clos- 
ing lines.  315.  If  you  receive  a  check  from  a  customer  to  settle 
his  bill,  less  a  certain  discount,  where  do  you  enter  the  check 
received  ?  316.  Where  do  you  enter  the  discount  ?  317.  Would 
the  discount  be  lost  or  gained  ?  318.  In  disposing  of  the  dis- 
count, which  form  of  entry  would  be  required  ?  319.  What  dis- 
position is  made  of  all  checks  we  receive  ?  320.  If  we  wish 
to  pay  a  creditor's  bill  of  $500,  less  6$  discount,  how  much 


360  APPENDIX. 

would  we  have  to  pay  ?  321.  How  would  we  pay  such  a  large 
amount  ?  322.  Would  you  fill  out  the  check  or  the  stub  first  ? 
323.  What  matter  would  be  important  to  have  appear  on  the 
stub  ?  324.  Where  would  you  enter  the  check  issued  ?  325. 
Where  would  you  -enter  the  discount  ?  326.  What  form  of  en- 
try would  be  required  in  disposing  of  it  ?  327.  Would  the 
discount  be  made  or  lost  ?  328.  How  would  you  dispose  of 
little  items  of  expense  ?  329.  If  a  salesman  draws  part  of  the 
money  due  him,  where  would  you  enter  it  ?  330.  What  ac- 
count would  you  charge  it  to?  331.  What  is  usually  the  last 
entry  made  on  the  Cash-book  each  day  ?  332.  How  do  we 
arrive  at  the  amount  of  retail  sales  ?  333.  Where  do  we  enter 
the  money  received  for  retail  sales?  334.  Repeat  the  five 
questions  that  arise  in  proving  the  cash,  giving  the  answers  to 
each  in  order.  335.  Repeat  the  five  questions  arising  in 
counting  the  money  in  the  drawer ;  also  the  answers  thereto,  in 
order. 


FIFTH   LESSON. 

336.  We  received  a  note  from  Miller  Bros.,  in  a  previous 
lesson  :  when  is  it  due  ?  337.  Where  will  you  look  to  find  out  ? 
338.  If  we  did  not  want  to  wait  until  due  for  the  money,  how 
could  we  get  it  ?  339.  What  do  you  understand  by  unexpired 
time  ?  340.  How  do  you  figure  discount  ?  341.  Where  would 
you  enter  money  received  for  the  note  ?  342.  Where  would 
you  make  an  extra  memorandum,  showing  where  the  money 
was?  343.  Where  would  you  make  an  extra  memoradum, 
showing  the  note  had  been  disposed  of  ?  344.  Would  we 
make  or  lose  by  having  the  note  discounted?  345.  What 
name  do  we  adopt  as  an  account,  to  represent  the  differ- 
ence between  the  face  value  of  the  note  and  its  present 
worth?  346.  In  what  book  would  we  enter  the  difference 
alluded  to  ?  347.  Which  form  of  entry  would  be  required  ? 
348.  What  is  a  draft  ?  349.  If  a  creditor  draws  on  us  at  sight, 


APPENDIX.  361 

what  action  would  we  take  on  presentation  of  the  draft  at  our 
office?  350.  How  would  we  pay  a  draft  of  large  amount? 
351.  Where  would  we  enter  the  money  given  in  exchange 
for  the  draft?  352.  What  account  would  we  charge  the 
money  to  ?  353.  If  we  hand  the  porter  and  office-boy  their 
pay  in  cash  for  services,  where  would  we  enter  it  ?  354.  What 
account  would  we  charge  it  to  ?  355.  If  we  had  many  em- 
ployees, how  would  we  keep  their  account  ?  356.  How  would 
we  dispose  of  the  matter  when  they  are  paid  ?  357.  How 
would  their  names  be  arranged  when  part  of  them  are  manu- 
facturers, and  part  office-help  ?  358.  What  account  would  the 
money  paid  manufacturers  be  charged  to  ?  359.  In  deducting 
checks  from  balance  in  bank,  where  would  you  locate  the  fig- 
ures to  be  deducted  ?  360.  Why  not  close  to  last  balance  ? 
361.  If  we  buy  goods  and  give  our  note  in  settlement,  in  which 
book  would  we  record  the  facts  ?  362.  How  many  accounts 
would  be  in  the  entry  ?  Name  them.  363.  Which  form  of 
entry  would  be  reproduced?  364.  If  somebody  with  whom 
we  have  no  account  buys  goods  of  us,  and  settles  by  note, 
how  would  the  matter  be  disposed  of  ?  365.  The  proposition 
is  the  reverse  of  the  foregoing ;  why  not  dispose  of  it  in  the 
reverse  order,  therefore,  and  in  the  same  way  and  place  ?  366. 
Our  first  Journal  entry  in  this  lesson  is  Interest  Dr.  to  Bills  Re- 
ceivable,  and  must  be  disposed  of  first,  in  place  of  the  entry  in 
paragraph  80.  We  open  an  Interest  account  on  page  9,  in  the 
Ledger  opposite  on  the  same  line  with  Sills  Payable,  which  is 
on  page  8,  and  on  the  debit  side  write 

Jan'y.  12  to  B.  R.  1.  47, 

then  turn  to  the  Sills  Receivable  account  at  top  of  page  8,  and 
write  on  the  credit  side 

12  „  Int.  1.  47, 

proceeding  with  the  other  Journal  entries  in  order  as  directed. 
In  paragraph  81,  we  say,  "  Post  from  the  Sales-book"  etc.,  when 
in  fact  there  have  been  no  entries  made  on  that  book,  this  les- 
son, and  for  that  reason  there  is  nothing  to  post  from  that 
book. 


362  APPENDIX. 

SIXTH  LESSON. 

367.  How  do  we  raise  money  when  we  are  short  of  funds,, 
and  have  no  accounts  due  that  we  could  draw  against  ?  368. 
What  regulates  the  rate  of  interest  charged  by  Banks  ?  369. 
If  we  borrow  money  of  our  Bank,  would  we  make  or  lose  the 
percentage  they  charge  us  for  the  use  of  the  money  ?  370.  If 
we  wish  to  know  at  the  end  of  the  year  what  this  particular 
kind  of  percentage  amounts  to,  how  would  we  be  able  to  find 
out  ?  What  is  the  difference  between  Discount  and  Interest,  as 
they  have  been  introduced  in  this  course  ?  371.  Where  would 
we  enter  the  money  received  from  the  bank  for  our  note  ?  372. 
What  two  accounts  would  be  affected  by  the  entry  ?  373. 
Where  would  we  make  an  extra  memorandum,  showing  where 
the  money  was  ?  374.  Where  would  we  make  an  extra  memo- 
randum of  the  note  given  to  the  bank  ?  375.  Where  would 
we  record,  having  lost  the  percentage  the  bank  charged  us  ? 

376.  How  many  accounts  would  be  in  the  entry  ?  Name  them. 

377.  Which  form  of  entry  would  it  be  ?     378.  Would  you  en- 
ter in  Cash-book  each  check  as  soon  as  issued  ?     379.  When 
would  you  enter  them?     380.  What  would  be  your  object? 
381.  If  a  customer  returns  damaged  goods,  where  would  you 
enter  the  matter  ?     382.  How  many  accounts  would  be  affected 
by  the  entry  ?     Name  them.    383.  Which  form  of  entry  would 
it  be  ?     384.  If  a  customer  demurs  against  our  charge  for  Case 
and  Cartage,  and  it  is  deemed  advisable  to  allow  it  to  him, 
what  account  would  you  charge  it  to  ?     385.  Where  would  you 
make  your  entry  ?     386.  What  form  of  entry  would  you  use  ? 

387.  In  paragraph  89,  we  say  "  Credit  Davis  &  Co.,  $4.00  allow- 
ance for  Case  and  Cartage."     It  should  be  $2.50,  as  they  were 
charged  $1.25  Jan'y  1  and  not  $1.50 ;  and  bill  of  Jan'y  12  was  can- 
celled and  so  not  in  their  account,  and  therefore  no  case  and 
cartage  is  charged  to  them,  on  that  date.     In  order  not  to  in- 
terfere with  your  final  results,  making  them  disagree  with  proof 
figures,  carry  the  $4.00  to   their  credit  as  though  it  was  right. 

388.  What  word  is  used  in  the  first  entry  on  the  credit  side  of 
every  account  in  the  Ledger  ?     389.  What  word  is  used  on  the 


APPENDIX. 

debit  side  ?     390.  Are  they  ever  repeated  in  the  same  account 
with  subsequent  entries?     391.  What  is  always  repeated^- 


SEVENTH  LESSON. 

392.  Suppose  you  receive  notes  from  two  firms  at  the  same 
time,  to  settle  their  account  less  discount :  in  what  book  would 
you  make  a  record  of  the  facts  ?  393.  How  many  accounts 
would  be  affected  by  the  entry  ?  Name  the  debtors  :  also  the 
creditors.  394.  Which  form  of  entry  would  you  use  ?  395. 
Why  would  not  one  explanation  suffice  for  both  notes  ?  396. 
Suppose  we  transfer  one  of  the  notes  to  our  creditor  on  ac- 
count, charging  him  its  present  wort'li :  in  what  book  would  you 
make  an  entry  ?  397.  How  many  accounts  would  be  involved  ? 
Name  the  debtors  :  also  the  creditors.  398.  Which  form  of  en- 
try would  you  use?  399.  If  a  creditor  draws  on  us  at  ten 
day's  sight  for  part  of  what  we  owe  him,  what  action  would  we 
take  on  presentation  of  draft  ?  400.  What  is  our  acceptance 
called  ?  401.  Where  would  you  make  a  record  of  the  accep- 
tance given  to  another  ?  402.  Where  would  you  mako  an  ex- 
tra memorandum  ?  403.  How  would  you  state  the  time  to  run 
in  centra-distinction  to  the  time  of  an  ordinary  promise  to- 
pay? 


EIGHTH    LESSON. 

404.  If  a  customer  requsts  us  to  draw  at  sight  for  what  he 
owes  us,  less  discount,  how  would  you  proceed  in  the  matter  ? 
405.  Upon  receiving  returns  for  the  draft,  would  you  immedi- 
ately dispose  of  the  discount  and  the  deduction  made  by  the 
bank  for  collecting  ?  406.  When  would  you  dispose  of  them  ? 
407.  What  do  you  understand  by  the  phrase  Exchange  on  New 
York,  or  New  York  Exchange  ?  408.  What  do  you  understand 
by  Exchange  as  introduced  here  ?  409.  Where  would  you  en- 


364  APPENDIX. 

ter  money  received  in  return  for  drafts  ?  410.  Where  would 
you  make  a  double  entry  of  all  the  differences  arising  in  this 
day's  cash  collections  ?  411.  How  many  accounts  will  be  af- 
fected by  the  entry  ?  412.  Name  the  debtors  :  also  the  creditors. 
413.  Which  form  of  entry  will  serve  your  purpose  best  ?  414. 
If  we  buy  goods  C.O.D.,  where  would  you  make  the  entry? 
415.  What  accounts  would  be  affected?  416.  What  do  you 
understand  by  C.  O.  D.?  417.  If  we  sell  goods  C.O.D.,  how 
would  you  dispose  of  the  matter  ?  418.  What  is  the  impor- 
tance of  an  explanation  in  every  entry?  419.  Suppose  the 
note  we  transferred  in  a  previous  lesson  is  returned  to  us, 
where  would  you  make  a  record  of  the  facts  ?  420.  How  many 
accounts  would  be  in  your  entry  ?  Name  the  debtors  :  also  the 
•creditors.  421.  What  form  of  entry  would  you  use  ? 


NINTH  LESSON. 

422.  If  a  customer  includes  in  his  remittance  to  you,  money 
to  be  handed  to  another,  how  would  you  dispose  of  the  matter 
on  the  books  ?  423.  How  would  many  book-keepers  dispose 
of  it  ?  424.  What  is  another  firm's  acceptance  called  ?  425. 
If  another  firm  accepts  our  draft  on  them  at  15  days  sight,  in 
which  book  would  you  enter  it  ?  426.  What  accounts  would 
l>e  affected  by  the  transaction?  427.  Which  form  of  entry 
would  be  used?  428.  Where  would  you  make  an  extra 
memorandum  of  the  acceptance  ? 


TENTH   LESSON. 

429.  How  often  should  we  refer  to  our  Bill-books  ?  430. 
When  our  notes  are  payable  at  our  bank,  does  it  require  our 
check  to  be  sent  there  to  meet  it  ?  431.  Where  do  we  make  a 
memorandum,  showing  the  bank  paid  it  ?  432.  Where  would 


APPENDIX.  365 

you  make  a  record  of  having  paid  a  note  ?  433.  What  accounts 
would  be  in  your  entry  ?  434.  In  advancing  money  to  a  sales- 
man for  expenses,  what  is  the  object  of  giving  him  a  check  for 
part  of  it  ?  435.  Why  would  it  be  wrong  to  charge  to  account 
already  opened  in  his  name  ?  436.  What  proof  have  we  that  our 
figures  are  correct,  upon  adding  the  monthly  cash  columns  ? 

437.  Explain  the  peculiar  way  of  closing  the   monthly  cash  ? 

438.  Explain  how  the  Sales-book  is  closed  monthly  ?     Para- 
graph 138  we  say  "  omit  case  and  cartage,  $1.25."    By  referring 
to  the  entry  alluded  to  on  the  sales  book  we  notice  that  case 
and  cartage  was  $1.50 ;  we  will  omit  it,  however,  and  to  make 
the  $213.25  correct,  we  charge  the  cuffs  at  $3.65  instead  of 
$3.60.    439.    What  entry  is  peculiar  to  the  Journal  on  the  last 
day  of  every  month  ?     440.  Is  book-keeping  sense,  so  to  speak, 
always  in  harmony  with  common-sense  ?   441.    Give  an  instance 
where  it  is  not. 


ELEVENTH  LESSON. 

442.  What  is  a  Trial  Balance  ?  443.  What  is  its  two-fold 
object  ?  444.  How  would  you  proceed  in  making  a  Trial-bal- 
ance ?  445.  What  would  you  consider  the  most  difficult  error 
to  find. 


TWELFTH    LESSON. 

446.  What  distinctive  feature  in  our  Journal,  the  second  month, 
that  it  did  not  possess  first  month?  447.  What  is  peculiar  in 
our  second  month  Cash-book?  448.  What  is  the  advantage 
of  this  peculiarity  ?  449.  Do  you  include  the  figures  in  the 
discount  columns,  in  proving  your  cash  ?  450.  Why  locate  the 
Balance  brought  forward  from  last  month  in  the  Amount 
column  instead  of  Sundries  column  ?  451.  If  a  customer  pays 
his  bill,  less  discount,  in  what  book  would  you  record  the  facts  ? 
452.  How  many  accounts  would  be  affected  ?  453.  How 


366  APPENDIX. 

you  state  your  proposition?  454.  How  could  we  use  our 
money  to  best  advantage  ?  455.  If  we  pay  a  creditor's  bill,  less 
discount,  in  what  book  would  you  record  all  the  facts  ?  456. 
How  would  you  state  your  proposition  in  a  double  entry  way  ? 
457.  Why  do  we  charge  cartage  to  Mdse.  in  one  instance,  to 
Expense  in  another?  458.  What  is  the  first  account  to  be 
posted  in  the  first  Journal  entry  this  month  ? 


THIRTEENTH  LESSON. 

459.  If  we  did  not  have  funds  enough  in  bank  to  meet  our 
note,  what  would  be  the  result  ?  460.  In  what  peculiar  way  do 
we  show  that  our  account  at  bank  is  overdrawn  ?  461.  How  is 
the  bank  account  often  made  good,  temporarily?  462.  Our 
bank  account  being  in  bad  condition,  what  did  we  do  to  make 
good  over-draft  ?  463.  What  would  govern  us  in  the  manner 
of  charging  bank  with  proceeds  of  several  notes  ?  464.  How 
could  we  restore  the  bank  account  to  its  normal  condition, 
when  the  overdraft  was  small  ?  465.  To  what  account  would 
you  charge  the  cash  paid  case-maker,  for  boxes  furnished  us  ? 
466.  When  would  it  be  charged  otherwise  ?  467.  To  what  ac- 
count would  you  charge  the  money  paid  in  liquidation  of  gas- 
bill? 


FOURTEENTH  LESSON. 

468.  If  a  customer  fails  to  pay  his  note  when  due,  what 
would  be  the  immediate  result  ?  469.  What  would  be  the  re- 
mote result,  if  we  had  disposed  of  the  note  ?  470.  What  does 
protest  mean?  471.  To  what  account  would  we  charge  the 
money  paid  for  protested  note  ?  472.  If  we  lend  money  and 
receive  a  note  for  it,  in  what  book  would  you  enter  it  ?  473. 
How  many  accounts  would  be  affected  by  the  transaction  ? 


APPENDIX.  367 

474.  What  accounts  would  you  charge  with  the  cash  advanced, 
and  the  interest  made  ?  475.  If  we  receive  a  note  from  our 
customer  in  renewal  of  his  protested  note,  covering  protest 
fees  and  interest,  how  would  you  enter  it  ?  476.  What  would 
be  the  theoretical  method  of  disposing  of  it  ?  477.  Why  would 
it  be  incorrect  ? 


FIFTEENTH  LESSON' 

478.  If  a  customer  sends  us  money  to  pay  his  note  before  it 
is  due,  and  which  we  had  previously  discounted  at  our  bank, 
how  would  you  set  the  matter  straight  on  the  books  ?  479. 
How  would  you  dispose  of  transient  customers'  accounts  on 
the  Ledger  ? 


SIXTEENTH  LESSON. 

480.  If  we  had  not  the  money  to  pay  our  note  held  by  the 
l3ank  for  borrowed  money,  what  would  we  do  ?  481.  Explain 
how  we  would  renew  a  note  held  by  an  outside  party.  Ex- 
plain how  we  would  renew  a  note  at  bank.  482.  If  we  re- 
ceive a  check  for  an  acceptance,  what  account  would  you  credit 
by  the  money  received ;  also  by  the  Exchange  for  collecting 
it? 


SEVENTEENTH  LESSON. 

483.  If  a  customer  fails  and  compromises  by  paying  40$  in 
cash,  what  would  become  of  the  balance  of  his  account  ?  484. 
What  account  would  you  charge  with  the  60$  of  his  account  ? 
485.  When  you  return  his  note,  in  which  book  would  you  enter 
it  ?  486.  If  the  note  had  been  negotiated,  and  therefore  not  in 
our  hands,  it  must  nevertheless  be  included  in  the  settlement, 
as  we  are  liable  as  endorsers  for  its  payment,  and  at  maturity 


368  APPENDIX. 

we  must  remit  the  money  to  the  place  where  the  note  is  payable, 
to  meet  it.  487.  Name  your  Debtor  account,  also  Credit  account 
in  the  entry.  488.  If  the  travelling  salesman  returns  and  hands 
you  $50  in  cash,  ol  the  money  advanced  him,  and  also  hands 
you  his  expense  report,  showing  his  expenses  had  been  $125.00 
on  the  trip,  and  that  he  had  used  $25.00  for  his  own  private 
purpose,  how  would  you  adjust  the  matter  on  the  books  ?  489 
When  too  much  money  accumulates  in  the  drawer,  what  would 
you  do  with  it  ?  490.  Explain  the  peculiar  way  of  closing  the 
Cash-book  this  month.  491.  Explain  how  the  Four-column 
Journal  is  closed. 


EIGHTEENTH    LESSON. 

492.  What  must  we  do  before  closing  the  Ledger  ?  493. 
What  do  you  understand  by  "Taking  Stock?"  494.  At 
what  price  would  stock  be  figured?  495.  What  becomes 
of  the  inventory  after  preparing  it?  496.  What  class  of 
accounts  do  we  dispose  of  first  ?  497.  How  do  we  dispose 
of  them  ?  498.  What  classes  are  next  disposed  of,  and  how 
are  they 'closed?  499.  What  will  the  speculative  accounts 
show  ?  500.  What  will  all  other  account  show  ?  501.  What 
is  the  object  of  closing  the  books  ?  Ans.  To  enable  us  to  arrive 
at  the  true  state  of  our  business  ;  that  is,  see  if  we  have  made  or 
lost  during  the  year,  and  in  what  shape  our  capital  is,  if  we  are 
solvent.  Books  are  not  closed,  "  to  mark  an  era  in  the  business," 
as  claimed  by  the  president  (?)  of  one  of  New  York's  business 
colleges,  who  evidently  has  more  regard  for  a  high-sounding 
phrase  than  for  the  sense  it  conveys.  We  could  mark  an  era 
in  the  business  without  closing  the  books,  by  closing  the  store 
instead,  and  taking  a  vacation  :  that  would  be  an  era  long  to  be 
remembered,  but  would  by  no  means  accomplish  the  result 
arrived  at  by  closing  the  books. 


UNIVERSITY  OF  CALIFORNIA  LIBRARY 
BERKELEY 

Return  to  desk  from  which  borrowed 
Tins  book  is  DUE  on  the  last  date  stamped  below. 


JAN   23  1948 


LD  21-100m.9,'47(A5702sl6)476 


BLANK  BOOKS  FOR  PRACTICE, 


Those  desiring  to  make  themselves 
master  of  double  entry  in  a  practical  way 
by  writing  up  a  set  of  books,  as  explained 
in  our  Eighteen  Lessons,  will  be  furnished 
with  a  full  miniature  set  of  blank  books, 
consisting  of  Cash  Book,  Sales  Book, 
Journal,  and  Ledger,  uniform  size,  all 
properly  ruled;  also  Check  Book,  Bills 
Receivable  and  Bills  Payable  Book. 
Price  $1.50  for  the  set. 

P.- A.  WRIGHT,  148  W.  14th  St., 

New  York  City. 


LD  21-100m-9,'47(A5702sl6)476 


YC  25026' 


mm, 


380310 


UNIVERSITY  OF  CALIFORNIA  LIBRARY 


